abandoned rail tracks uk

UK railways risk ‘spiral of decline’ without post-pandemic reforms, sector warns

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Britain’s railways are at risk of a “spiral of decline” without legislative reforms that leverage more private sector investment, a report has found.

Rail Partners, which represents independent passenger and freight train operators, warned that the government’s current focus on cost reduction will lead to reduced services and fewer people travelling by train.

“This would be a bad outcome for passengers and also for taxpayers funding the service,” the report said.

It recommends boosting investment from private sector operators to help them attract passengers in a bid to restore revenues that have been lost since the pandemic.

A thriving railway would also help to tackle some of the UK’s current economic challenges and contribute towards climate change efforts, report said.

“As a lower carbon form of transport, rail also helps to deliver the government’s sustainability objectives, air quality improvements and reduced congestion in towns and cities up and down the country.”

As it emerges from the pandemic, the rail sector is facing a significant financial hole. While fixed costs remain fairly constant, revenue recovery has plateaued at around 80 to 85 per cent of pre-pandemic levels – with taxpayer support sitting at around £1.5bn to £2bn higher each year than before the virus hit.

The report said that taxpayer support could be reduced by creating a new framework designed to boost innovation from private sector operators.

Independent analysis conducted for Rail Partners by the consultancy Oxera suggests that up to £1.6bn to £2.1bn in revenue is potentially being missed over the next two years due to inflexible contractual arrangements that were required during the pandemic but are no longer appropriate.

The report also estimated that ongoing industrial disputes have cost the sector £320m in lost revenue, and the wider economy almost £700m.

“The railway finds itself at a fork in the tracks – facing one of its most significant points of inflection since privatisation,” Rail Partners said.

“It faces a fundamental question of how best to avoid decline and accelerate recovery. Delays to wider reform and legislation as well as a backdrop of industrial action compound these questions.

“If we get it wrong, the railway faces a protracted hiatus, a stunted recovery from the pandemic and most likely a permanently smaller railway. If we get it right, the railway can return to growth and help the country do the same – with rail acting as a catalyst for economic growth and decarbonisation.

“It is a shared responsibility to protect the railway’s future and private sector operators have the necessary skills, expertise and resources to secure its future in partnership with the Department for Transport and ultimately Great British Railways. We must act now to grow revenue and restore industry finances, to secure the future of this critical national asset – not for its own sake but for the wider benefits it delivers to the country.”

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