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In this report by the Exchange newsletter in the UK this week. Every Wednesday, Jan King brings you expert ideas about the most important business stories from the UK and other key events you don’t want to miss. How is what you see? You can subscribe Here.
Shipment
31 years after they were privatized, the UK railways return to state property.
Railways, stations, tunnels and signals of the country were effectively renationalized in 2002, but it was a policy of current labor administration when they were elected last year to return themselves to the state.
Only the rolling stock – coaches, steam locomotives and freight cars – and most rail cargo operators should remain in private hands, with one important exception to which we will come.
Accordingly, in May this year, the railway franchise, which is responsible for driving trains before and from the London Waterloo – reinterpreted south -western railway – was returned to state property.
Accordingly, for the British of a certain age who remember the dilapidated trains of the old British railway and the terrible service before privatization, the first nationalized service included a bus to replace the railway.
The renationalization process will continue when at the end of this month C2C, which runs trains between London and Essers, will be accepted into state property, with great England, which is due in the coming months.
With four London Northeast Railways (Lner), northern, southeastern and Transpennine Express, the government, the government promised that all the railway franchises will be renationalized by the end of this parliament.
He also intends to integrate train operations and tracking into a new essence, the Great British Railways, which stops the separation of the network and trains that took place during privatization.
Train Lner, which was seen at the King’s station.
Images Sopa | LightRockket | Gets the image
But this is not quite the end of the story.
While the discussion was still raging, whether the privatization of the railway – from plus, this led to a huge increase in the number of passengers and better rental; On the other hand, this has led to much higher tariffs-one positive, with which most industry experts agree, is the appearance of so-called “open access” operators.
They compete with franched operators who are now nationalized, who perform contracts with the government to manage services. Unlike franched operators, open access operators take all the risk of tickets and other income that does not meet expectations.
Their presence was felt most acute on the main line of the Eastern coast, connecting Edinburgh with London and served by Yorkshire, Eastern Midlands and in the northeast of England.
Operators open access such as Lumo and HULL trains are attributed to standards and reducing tariffs. It is important to note that the main line of the east coast-one part of the UK railway network, where the number of passengers resumed to the pandemic.
Despite these achievements, open access is not publicly available. Britain is powerful Rail unions hate it And so he has long suspected that civil servants in the transport department (DFT). This came to greater attention because during the last year happened Write down the number of applications made by companies for operating trains under open access.
This pushed Heidi Alexander, a new secretary of transport, to write in January to Declan Coler, the chairman of the railway office and the road (orr), the industry regulator, warning him about taking the greater a strict approach to open access applications.
She ordered him to consider whether there would be enough opportunities for new services on the railway network and caused concern that open access operators did not meet the full access value. She also told him to remember whether new revenue operators would deprive new operators.
This has caused concern that Alexander could simply bid railway unions and seek to protect government operators such as Blast of Contration. These worries were strengthened when Richard Hudman, one of the senior civil servants at the end of June, wrote Collier Strengthen Alexander’s message.
“The DFT analysis suggests that the amount of annual abstraction of each of the currently open access applications will be up to £ 229 million (24/25 prices), without the impact of income resulting from the interaction interaction,” he wrote.
“This is a significant additional cost for taxpayers and will significantly affect the funds available to the Secretary of State.”
Some saw this letter as an attempt to dissuade Orr from approval of new applications.
If it was the intention, it seems, the tactic worked.
Last week, Orr rejected applications for three companies looking for network access contracts to launch services on the main line of the west coast, which binds Glasgow with London and serves large cities, including Birmingham, Liverpool and Manchester.
After explaining this decision, Stephanie Tobin Orr said: “It was clear that there was not enough opportunity to approve any service without a serious negative impact on the level of the train results, which the passengers feel on the main line of the west coast.”
Among those whose application was blocked, were Richard Branson Virgin Trains, the previous ones – and the popular franchise operator on the main line of the Western coast, which called the decision “a blow to consumers and competition.”
This news also disappointed enterprises in some parts of the country that are now not subjected to the existing network. A good example is Shrapshire, where there was a strong support of plans from the new operator, Wrexham, Shropshire and Midlands Railway, owned by the French Rolling Stock Alstom to pass five trains a day between Shrapshire and London.
All this caused concerns that Alexander and Railway Minister Peter Handy, an industry life, decided to kill open access – the operators would be too expensive to renocively.
For its part, the Transport Department says it is not true.
“We support open access services where they encourage growth, improve communication and provide more choices for passengers,” said the DFBC press secretary. “However, open access should not come to the value of the taxpayer or have a negative impact on performance.”
Geographical gap
Discussion around open access can lead to an intriguing collision in the government.
Alyaksandr, while the Svindan MP has spent all his career in London both in local and national politics. Hendy also held her career in the capital, mainly working in state transport for London and his predecessor of London transport. Thus, their thinking about the railway was informed by the transport system of the capital, which is very different from the end of the rest of the country.
Other senior government figures, such as Interior Minister Itve Cooper and Education Secretary Bridget Philipson, may have an alternative view. The couple presents constituencies in Yorkshire and the northeast respectively, and will know how popular the operators of open access among their voters to maintain competition and reduce prices.
They can also count on the support of Chancellor Rachel Reivz, whose constituency is located in Lids – the largest city of Yorkshire, which is not yet used by the direct service provided by open access operators.
MPs representing places that live for manufacturers such as Alstom, Siemens and Hitachi, which support thousands of qualified production jobs, can also expect open access to.
Alst and Simen recently warned of refusal to ministers to sign up for new orders, while Hitachi won the Lumo’s 500 million sterling contract to deliver 14 new trains last December.
In any case, Alexander and Handy should have other priorities. For example, it is unclear when the Great British Railway is officially launched or who will become its main supervisor.
There is also a treadmill that makes HS2 originally designed to build a new high -speed railway between London and cities in Midlands and north of England, but which will now be Run only in Birmingham And these are years, lagging behind the schedule and billions of pounds for the budget.
Meanwhile, being in a position where the railway was close to covering its daily work costs to a pandemic, subsidies of taxpayers have since been air frantically.
In 2022-23, the last year, for which the figures available, the state support of the railway amounted to 21.1 billion pounds, which is 64.5% to the level to the pandemic, and the income from passengers amounted to only £ 9.2 billion, which decreased by 31% at the pandemic level.
Housing growth means that the number of passengers is unlikely to recover to the level of pandemic. This means that if the total number of passengers is restored, the railway will have to do more to attract travelers. This is a task for which open access operators with their experience of innovation in tariffs and services.
– Jan King
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Need to know
In the markets
UK FTSE 100 Over the past week, it got well, increasing about 0.65%, by about 0.35% discount on the record in June.
In case you missed it, the fundraiser from the London IPO dropped at least on Three decades low In the first half of this year – raising new questions about the UK’s appeal as a center for global capital.
The Financial Times Stock Exchange Index performance for the last year.
Perceived Lack of strong support Last week, its Prime Minister’s Prime Minister appeared both in the UK and state bonds market. A British pound Currently, about $ 1.35 is trading to the dollar, less than $ 1.37 – where it was until June 2.
Exactly the same Gilded crops Currently, trades of 4.63% cannot return to the level that is observed before the parliamentary analysis.
