A new model for operating rail services across Britain needs to be found due to the Covid-19 pandemic, according to a Welsh Government minister.
Deputy transport minister Lee Waters said the Welsh Government was nationalising its rail services following a significant drop in passenger numbers because of coronavirus.
Private operator KeolisAmey, a joint venture between French transport giant Keolis and Amey, has run the franchise in Wales for just two years after taking it over from Arriva Trains Wales.
From February next year, day-to-day services will be run by a publicly owned company.
Powers over rail passenger services are not fully devolved to Wales, and UK law currently prevents it from permanently retaining the service in public ownership.
“At one point 95% of passengers stayed away from services and clearly that element of the business model just fell away and therefore the business model collapsed,” Mr Waters told the Senedd’s economy, infrastructure and skills committee.
“We, as operators of last resort, had the choice of stepping in and make sure a service is there for commuters and passengers or do we simply say this is a crisis, the model has imploded and the services can constrict?
“That is the discussion we’re having with our Treasury colleagues in the Welsh Government.”
Mr Waters said the UK Government had chosen a different model by underwriting the losses of the private sector rail operators for the next 18 months.
“We’ve made a different choice based on our values and aspirations to bring this into a public control through Transport for Wales,” he said.
“It does address the issue of affordability, but I think the real question for all of us is how much and how long will this pandemic continue to have an impact on passenger numbers?
“In the meantime, what is the appetite of the public sector to intervene and fund sustaining of services to make sure that there is a public good? That is a really live question and it’s a difficult judgment.”
Most train services in Britain have operated as franchises since the railways were privatised around 25 years ago.
These involve the Department for Transport setting out the terms of service required and private firms submitting bids.
The chaotic introduction of new timetables in May 2018 led to the commissioning of Royal Mail chairman Keith Williams to carry out a review of the railways.
Welsh Government official Simon Jones, the director of economic infrastructure, said he believed the recommendations of the Williams review will have been affected by the pandemic.
“The market conditions frankly at the moment mean at the moment no sane private sector operator will step in to take a revenue risk on the railway,” he said.
“It’s going to be many years before the model which has been running up until now would be sustainable again.
“But as the deputy minister said, this is not a problem that is just in Wales, it’s a problem across the whole of the UK. The UK Government are going to need to think about this.”
In England, the EastCoast and Northern franchises are currently run by the UK Government as operators of last resort.
“Who knows how many they might end up with as they go through this,” Mr Jones said.
“Keith Williams’s assessment was based on the conditions that existed pre-Covid.
“That has changed and I’m sure our colleagues in the Department of Transport are looking again at the recommendations that they would have seen from Keith Williams through a new lens.”
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