Speculation mounts over whether rail operators will immediately come under public control
Control of Avanti's West Coast rail franchise is likely to be handed over to an operator of last resort (OLR) within the Department for Transport, sources have said.
The move will allow businesses acting on behalf of the government to place services under emergency public control when a company fails or breaches the terms of a contract.
On Wednesday morning, the Northern Transport Committee, made up of mayors and council leaders, unanimously backed a move to ask the Secretary of State to terminate Avanti West Coast's contract and bring it into public ownership, fueling speculation that a decision is imminent.
It follows months of severe disruption and regular cancellations following an irreversible breakdown in relations between staff and management.
In September, a joint venture between UK-based FirstGroup and Italian train operator Trenitalia secured a lucrative long-term contract to continue operating intercity services on the West Coast Main Line.
At the time, Transport Secretary Mark Harper described Britain's least punctual operator as “back on track”, despite warnings from the RMT union that Avanti was “an unmitigated disaster”.
Ten days after the rail franchise secured a lucrative long-term government contract, the company posted a record loss totaling £68.4m in the 27 weeks to September 30, down from £8.7m in the same period a year ago.
First Group suffered huge losses after it terminated its participation in two local government pension schemes.
After the concession ends, the Department of Transport pays an administrative fee to the company operating the passenger service and bears most of its operating costs.
While management fees are not disclosed to the public, public accounts show the Department for Transport has paid Avanti £1.175bn to run its services since the outbreak.
According to First Group's latest profits for the year to March 2023, Avanti made a pre-tax profit of £12.8m and subsequently paid out £11m in dividends to shareholders, mainly First Rail Holdings.
Two months later it will relinquish control of the TransPennine Express franchise after months of cancellations and delays.
All decisions, including payments to shareholders, are signed off by Transport Minister Mark Harper.
Earlier this year, Novara media reported that during an internal company presentation in January, the operator's senior management reveled in the “free money” provided by taxpayers.
The slide joked that Avanti West Coast would receive a performance-based bonus from the Treasury for delivering a less-than-perfect service in a program that was labeled “too good to be true.”
The “regrettable” demonstration was released shortly after Christmas, when less than half of Avanti West Coast trains arrived on time, with 23 per cent of trains canceled entirely at short notice.
The East Coast Main Line (LNER), Northern Rail, South Eastern Trains and Pennine Express trains are currently under public control by the Department for Transport Operator of Last Resort (DOHL).
The DOHL Group currently operates more than 3,600 trains per day and employs more than 14,800 people.
This means that nearly 25% of train journeys are currently made on state-owned rail services.
Appearing before the transport select committee in September last year, Railways Minister Huw Merriman confirmed there were no plans to re-privatize the contracts it had taken over through the operator of last resort.
Merriman said OLR's franchises were running extremely well: “If you look at the June/July performance, stable performance was up across each of their four operators”.
LNER, one of the operators under public control, is seeing record passenger numbers.
Between January and March 2023, passenger travel volume increased by 111% compared with the same period before the outbreak in 2019.
The Department for Transport said it does not expect to make an announcement today (Wednesday).
The national rail contract, awarded to First Trenitalia in September 2023, has a core term of three years, after which the department can terminate the contract at any time with three months' notice.
FirstGroup and Avanti said that while they were aware of the nationalization rumors, they believed them to be false.
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