UK rail operators face sharp budget cuts next year

Rail companies are planning double-digit budget cuts next year, raising the possibility that there will be fewer trains on the UK rail network as the industry grapples with a revenue slump since from the coronavirus pandemic.

The Department for Transport, the financial regulator of the rail industry, has told train operators they will need to reduce spending, according to three people familiar with the matter.

The two said budget cuts of more than 10% were discussed, although the exact amount may vary from company to company and some operators may not face such drastic cuts. .

Training company executives say fewer training services are an inevitable consequence of budgeting.

“These are very, very strict cost-cutting requirements that we fear will affect the rail line and the passenger experience,” another said.

Train operators are preparing budgets for the financial year starting April 2023 following the guidance of the DfT, which assumes all risks of costs and revenues from the industry as Covid results in passenger volumes. dropped almost immediately in March 2020.

New pressures on industry finances come as passenger numbers and ticket sales struggle to recover from the impact of the pandemic in tandem with a decline in the number of high-paying passengers.

Total passenger revenue was £2.2 billion in the three months from July to September, the most recent quarter for which data is available, according to the Office for Rail and Road, the industry regulator. This is 71% of the £3.1 billion in the same period in 2019, when adjusted for inflation.

The industry made £164m from season tickets during this period, just 29.4 per cent of the £556m earned three years earlier. The number of tickets sold during peak hours has also plummeted as many people arrange travel times to avoid the most expensive trains.

Ministers have long said the industry must reform to save money and adapt to changing travel patterns, after spending billions of dollars keeping trains running during the period epidemic.

But Louise Haigh, shadow transport secretary, said the government needed to “clarify” its plans and “stop shirking accountability” over problems on the railways.

“Rail passengers across the country have been forced to rely on a failed service due to years of Tory failure to promise infrastructure and an inexcusable refusal to force operators to Private failure must be held responsible.

“The veil of secrecy of massive cuts to already-impaired services is deeply unsettling.”

The rail industry’s dire financial situation also contributed to the most severe industrial unrest in a generation, as unions staged waves of strikes over disputes over pay increases and changes. working method.

With a budget so tight, the government says the big pay rise must be tied to modernization, causing conflict with the RMT union.

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

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