UK rail operators will face huge budget cuts next year | Daily News Byte

UK rail operators will face huge budget cuts next year

 | Daily News Byte

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Railway companies are preparing double-digit budget cuts next year, raising the prospect of fewer trains on Britain’s rail network as the industry grapples with a drop in revenue following the coronavirus pandemic.

The Department of Transport, which controls the railways’ finances, has told train operators they will need to cut costs, according to three people familiar with the matter.

Budget cuts of more than 10 percent were being discussed, though the exact amount may vary by company and some operators may face such large cuts, the two people said.

Train company executives said the reduced train services were an inevitable consequence of budget preparation.

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

Train operators are preparing their budgets for the financial year starting in April 2023 under instructions from the DfT, which in March 2020 assumed all costs and revenue risk from the industry leading to a near-instant collapse in passenger numbers due to Covid.

The industry’s finances are under renewed pressure as passenger numbers and ticket revenues fall in parallel with higher fare-paying travelers struggling to recover from the impact of the pandemic.

Total passenger revenue was £2.2bn 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 industry regulator. This is 71 per cent of the £3.1bn in the same period in 2019, when adjusted for inflation.

The industry earned £164mn from season tickets during the period, just 29.4 per cent of the £556mn earned three years earlier. The number of peak tickets sold also fell sharply, as more people timed their journeys to avoid the most expensive trains.

Ministers have long said the industry must make reforms to save money and adapt to changing travel patterns, spending billions running trains during the pandemic.

But shadow transport secretary Louise Hay said the government needed to “come clean” on its plans and “stop shirking responsibility” for problems on the railway.

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

“The veil of secrecy over direct cuts to already shockingly poor services is deeply troubling.”

The railway’s shattered finances also contributed to the generation’s most significant industrial unrest, as unions resorted to strike action in disputes over pay rises and changes to working methods.

With the budget so tight, the government has said large pay rises must be linked to modernisation, sparking a clash with the RMT union.

The Department for Transport said: “Due to commercial confidentiality, we cannot comment on ongoing budget discussions. We continue to ensure that all rail operators provide services that better meet post-pandemic demand, in the most cost-effective manner.”

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