Railnews 284 News page 5 Reaction lead HEAD: Operators start countdowns towards new contracts STANDFIRST: New agreements with the DfT will need to be reached by December says transport group PIC: 2016-09-02 (158).JPG CAP: First’s Great Western Railway appears to be in a special category FRANCHISES may be officially over and running on temporary Emergency Recovery Measures Arrangements, but the former franchise holders will need to take swift action if they want to stay in the railway passenger business. According to FirstGroup, the DfT will now be starting talks with the franchise holders over the terms they would accept to terminate their present contracts and introduce new directly-awarded replacements. Agreements are needed by mid-December, but if these talks fail then the DfT can allegedly end the relevant ERMA early and reinstate the former contract terms in January. In such a case, the franchise holder would be taking commercial risk once again, although such an outcome seems unlikely. One franchise, First’s Great Western Railway, appears to be in a special category. It signed an agreement with the DfT on 1 September for support to continue until next June at least. Transport secretary Grant Shapps has conceded that large-scale taxpayer support will be needed for some time yet. On 21 September, he said: ‘Until passenger numbers return, significant taxpayer support will still be needed, including under the ERMAs announced today. But these arrangements pave the way for wider rail industry reform that put passenger priorities at the forefront and will enable substantial medium and longer-term savings for the tax payer. The railway will have a new and greater focus on delivering a reliable service which passengers can trust.’ The RMT said the recent moves should be the first steps on the path to full renationalisation. General secretary Mick Cash said: ‘This announcement should now force the government’s hand and lead them to face up to what has been staring them in the face for the best part of three decades, that public ownership is the only model that works and can steer us through a crisis such as Covid-19. The Government must now ditch its obession with the free market and call to a halt any attempts to reanimate the corpse of rail privatisation. ‘The money that would have been hoovered up in profits by the private rail companies should now be reinvested into our railways to ensure we have an affordable, accessible and resilient system fit to withstand other crises such as the extreme effects of climate change that is already having a serious impact on our railway infrastructure.’ Meanwhile, freight operators are unaffected by the ending of franchises but are concerned about their prospects, especially as the volume of cargoes carried was 26 per cent lower between April and July compared with a year earlier, according to the ORR, although a recovery now seems to be underway. Rail Freight Group director general Maggie Simpson said: ‘Rail freight operators continue to operate in the private sector, as they have done for the past two decades. They, and their customers, expect their needs to be placed at the heart of the railway, alongside, and no less than, the needs of passengers.’ ENDS © Railnews Ltd 2020