At the same time, services are being cut drastically to bring them more in line with demand which has fallen steeply. Passenger numbers are down by 70% due to the coronavirus and revenue has dropped by two-thirds, but the government wants to maintain a minimum level of service for essential workers and travel.
All revenue and cost risk is being transferred to the government for six months initially. Franchisees will continue to operate services in return for a fee, which will be set at a maximum of 2% of the cost base of each franchise before the coronavirus pandemic began.
“The maximum fee attainable will be far less than recent profits earned by train operators,” says the DfT. “In the event that an operator does not wish to accept an emergency measures agreement, the government’s operator of last resort stands ready to step in.
“Allowing operators to enter insolvency would cause significantly more disruption to passengers and higher costs to the taxpayer. The management fee will allow operators to act in the national interest in tackling Covid-19,” the DfT says.
Passengers with advance low-fare tickets will be able to obtain a refund without penalty while season ticket holders can get a refund for the period when the ticket is not being used.
The ScotRail and Transport for Wales franchises are managed by the Scottish and Welsh governments.