Government extends emergency agreement for Great Western Railway
First Group this morning said the Department for Transport (DfT) has extended its emergency deal to keep franchise Great Western Railway (GWR) running for another nine months.
At the end of March, First Group signed a new contract with DfT to run the franchise for three years, with the option to extend the deal by one year.
As part of the deal, GWR was immediately placed under an Emergency Measures Agreement (EMA), along with the rest of the UK’s rail franchises, to keep it afloat as passenger numbers collapsed due to coronavirus.
Under the measures, which were initially imposed for a six month period, rail franchises are paid a fixed fee by the government to run services while the government collects fares.
The initiative has allowed the railways to continue operating even as passenger numbers flatlined due to the pandemic.
First Group said the deal could be extended again when it comes to an end in June 2021, or that it could decide to switch back to a system where it is provided with protection against a potential plunge in revenue.
Chief executive Matthew Gregory said the new deal demonstrated “the essential nature of GWR’s services to the communities it serves, and provides important clarity and continuity for our customers, employees and wider stakeholders.”
Shares in the firm sank over four per cent this morning.
First Group’s other three franchises are also currently being run under EMA lines until 20 September, although the government is widely expected to extend these contracts as well.
According to the Sunday Telegraph, officials in Whitehall are rushing to finalise these new deals, which will be called Emergency Recovery Measures Agreements (ERMAS).
The replacement contracts will operate on similar lines to the current ones, and are expected to last for 18 months.
However, over the long term, the government is widely expected to take management of the railways in-house on a permanent basis, with the pandemic exposing existing flaws in the creaking rail franchise system.
Back in June transport secretary Grant Shapps said that the pandemic had given the country the chance to move to a “different type of railway”.
With schools beginning to reopen and more people expected to return to work, franchises are now beginning to ramp up services to cater for increased demand.
According to industry body the Rail Delivery Group, services will increase to about 90 per cent of pre-pandemic levels from the beginning of next week.