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Government takes over UK rail network 'to provide stability' during Covid-19 outbreak

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Passengers wait to board a train at Manchester Piccadilly on March 19, 2020 in Manchester, England. (Alex Livesey - Danehouse/Getty Images)

The government has announced temporary measures to take charge of the UK’s rail network “to provide stability and certainty” during the ongoing coronavirus pandemic.

The Department for Transport said on Monday it would temporarily suspend all rail franchise agreements for an initial six months. Private sector train companies will continue to run their routes for a set fee but the government will collect all revenues and take on all risk associated with the running the railways.

Annual season ticket holders will be able to claim a refund for unused time free of charge. Transport Secretary Grant Shapps told the BBC he would "ensure no-one is unfairly out of pocket for doing the right thing".

The government said the measures were necessary to keep the rail system operating after a sharp drop in passenger numbers. Passenger numbers had already fallen by 70% and a sustained slump could leave some train companies at risk of going bust.

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“This will allow us to ensure that trains necessary for key workers and essential travel continue to operate,” the Department for Transport said in a statement. “No other passengers should travel.”

Londoners starting to work from home has led to empty train carriage seats, such as on this service on 19 March 2020. (Richard Baker / In Pictures via Getty Images)

“People deserve certainty that the services they need will run or that their job is not at risk in these unprecedented times,” Transport Secretary Grant Shapps said in a statement. “We are also helping passengers get refunds on advance tickets to ensure no-one is unfairly out of pocket for doing the right thing.”

Paul Plummer, chief executive of the Rail Delivery Group, which represents train operators and Network Rail, said: “The industry strongly welcomes the Department for Transport’s offer of temporary support and while we need to finalise the details, this will ensure that train companies can focus all their efforts on delivering a vital service at a time of national need.”

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Matthew Gregory, chief executive of transport company First Group (FGP.L), said: “We welcome and have accepted the UK Government’s swift and comprehensive offer of emergency measures which provides certainty for all of the Group’s franchises and the continuity of our vital rail networks during this time.”

Separately on Monday, First Group and rival transport operator Go-Ahead (GOG.L) both put out statements warning of a sharp drop in passenger numbers and business. Both companies reassured investors they were doing everything to conserve cash and keep the business going.

Go-Ahead, which also runs bus services, said it would also help to support the UK response to coronavirus by laying on extra buses for NHS workers and for food deliveries.

“We aim to support the UK's efforts in tackling the crisis by providing unused buses to transport NHS workers, supporting supermarkets with food deliveries and delivering essential goods to cut off and self-isolating communities,” said David Brown, Go-Ahead chief executive.

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