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Britain’s trains have effectively been nationalised, at least temporarily, after the government suspended rail franchise agreements to avoid train companies collapsing because of the coronavirus.
Under emergency measures announced by the Department for Transport (DfT), train operators have been offered the chance to transfer “all revenue and cost risk” to the government and be paid a small management fee to continue running services.
The industry body the Rail Delivery Group (RDG) said it “strongly welcomes” the proposals, which boosted the share prices of listed companies with rail franchises, such as FirstGroup and Go-Ahead.
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While the measures are temporary, they nonetheless signal the permanent end of the UK’s complex rail franchising system, which was already likely to be abolished by the government commissioned Williams review.
The emergency protocol will be in place for an initial period of six months, the DfT said, in order to “minimise disruption to the rail sector”.
Allowing operators to enter insolvency would cause “significantly more disruption to passengers and higher costs to the taxpayer”, the department added.
Shares in the rail operator Go-Ahead surged by 17% as a result of the government taking on responsibility for its franchises, Govia Thameslink and Southeastern, despite the company cancelling its dividend to conserve cash.
This article first appeared on www.theguardian.com
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