Greater Anglia funding crisis 'shows franchising needs rethink' – rail expert Christian Wolmar
PUBLISHED: 17:53 18 October 2018 | UPDATED: 17:53 18 October 2018
It may be impossible to provide rail franchises that satisfy everyone – that is the warning from transport expert Christian Wolmar after Greater Anglia’s financial headaches emerged this week.
The rail operator has had to rely on an £80m cash injection from its majority shareholder Abellio – owned by Dutch State Railways – because it was forced to pay increased fees to the government because of a complex revenue formula.
Mr Wolmar, who has written several books on the rail industry, said Greater Anglia was facing the prospect of paying higher fees because of the “Central London Employment” mechanism brought in to reduce excessive profits during earlier franchises.
He said: “This formula came in because some years ago the number of commuters was increasing very fast and the companies’ revenues and profits were soaring – they were considered excessive.
“The formula is designed to ease the peaks and troughs of profits – ensuring companies do not make excessive amounts but shielding them if the number of people travelling falls.
“However some of the assumptions used in creating the formula have changed and now Greater Anglia is left with high charges but not enough revenue to cover them.”
Mr Wolmar, a former Labour parliamentary candidate, said there needed to be a radical change in the way the rail industry was run: “I’m not sure there is a franchise model that can satisfy everyone.”
Greater Anglia and Abellio have said that the financial problems should not affect the planned new trains for the region – but the chairman of the Great Eastern Main Line Task Force, Conservative MP Priti Patel, has written to transport secretary Chris Grayling to seek assurances about the franchise.
She said: “The GEML Taskforce has worked closely with Greater Anglia on key investment projects, including the development of new state-of-the-art trains due to be introduced on the line from summer 2019.
“Rail users along the GEML will understandably be concerned about this news and whether the current state of Greater Anglia’s finances will delay the roll out of the new trains and compromise the operator’s ability to deliver on other franchise commitments.
“The government should monitor the ability of train operators to stick to their franchise commitments more closely before significant financial challenges occur.
“I have written to the secretary of state for transport, urging him to intervene personally and reassure the Taskforce and rail users that Greater Anglia’s current financial issues will not impact upon the key investment projects to improve the quality and reliability of services as agreed in the franchise agreement.”