February 3, 2023

Rail companies are preparing plans for double-digit cuts next year, raising the prospect of fewer trains on Britain’s rail network as the industry struggles with a drop in turnover since the coronavirus pandemic.

The Ministry of Transport, which manages the railway’s finances, has told train operators to cut costs, three people familiar with the matter said.

Cuts of more than 10 percent were talked about, although the exact amount may vary from company to company and some operators may not face such significant cuts, two people said.

Train company executives said fewer train services were an inevitable consequence of the budgets drawn up.

“These are very, very demanding cost savings that we fear will have an impact on the rail and on the passenger experience,” said another.

Train operators are preparing their budgets for the fiscal year commencing in April 2023, at the behest of the DfT, which took on all of the industry’s cost and revenue risks as Covid led to an almost immediate collapse in passenger numbers in March 2020.

The renewed strain on the industry’s finances comes as passenger numbers and ticket revenues struggle to recover from the impact of the pandemic, in parallel with a collapse in high-paying commuters.

Total passenger turnover was £2.2 billion in the three months between July and September, the most recent quarter for which data is available, according to the Office of Rail and Road, the sector’s regulator. This is 71 per cent of the £3.1bn in the same period in 2019, adjusted for inflation.

The industry earned £164 million from season tickets in that period, just 29.4 per cent of the £556 million earned three years earlier. There was also a steep drop in peak ticket sales as more people time their commutes to avoid the most expensive trains.

Ministers have long said the industry needs to reform to save money and adapt to changing travel patterns, after spending billions to keep trains running during the pandemic.

But shadow transport secretary Louise Haigh said the government needs to “clean up” its plans and “stop evading responsibility” for the problems on the railways.

“Rail passengers across the country have been forced to rely on a failing service thanks to years of broken Tory promises about infrastructure and an indefensible refusal to hold failing private operators accountable,” she said.

“The shroud of secrecy over sharp cuts to already shockingly poor services is deeply disturbing.”

The railroads’ financial problems have also contributed to the biggest industrial unrest in a generation, as unions stage waves of strikes over wage increases and changes in working practices.

With budgets so tight, the government has said big wage increases should be linked to modernization, leading to a clash with the RMT union.

The Department of Transport said: “Due to commercial confidentiality we are unable to comment on ongoing budget discussions. We will continue to ensure that all rail companies are delivering services that better meet post-pandemic demand in the most cost-effective way.”

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