Wales to renationalise rail as passenger numbers plunge

Oliver Gill
·3-min read
Llangollen Railway
Llangollen Railway

The Welsh government is poised to nationalise its railways after bailout talks with the current operator were unable to agree a privately-led deal and Covid continued to hammer public transport.

Ministers are expected to formally announce the transfer of operations to state-owned Transport for Wales on Thursday morning, insiders said. 

Transport for Wales will take direct control of travel on the country's 900 miles of railway, replacing a joint venture that includes French-owned firm Keolis, after passenger numbers plunged as a result of coronavirus.

The Welsh nationalisation comes amid a separate escalating row between London mayor Sadiq Khan and Whitehall, following a threat from Transport Secretary Grant Shapps to strip him of control of Transport for London (TfL).

Trains in Wales have been run since May 2018 by a joint venture between Keolis, a subsidiary of France’s SNCF, and engineering contractor Amey.

While the pair will continue to be responsible for tracks and other rail infrastructure, control of services will be handed back to the state. 

Emergency measures were introduced in March in order to keep trains running during the first six months of crisis, with a replacement agreement finalised in England last month but no such deal struck in Cardiff. 

The UK Government prepared for a number of operators handing back the keys to franchises by setting up a series of shell companies. 

Derailed: Train operators bracing for post-virus lull
Derailed: Train operators bracing for post-virus lull

Wales’s “Operator of Last Resort” was hastily renamed “Transport for Wales Ltd” last week in anticipation of government officials in Cardiff stepping in.

Meanwhile, London is facing a rail crisis of its own with emergency funding for tube operator TfL set to run out in days.

Mr Khan has said he cannot accept demands by the Transport Secretary to help plug a cash shortfall with higher council tax and an extended congestion charging zone.

But ministers have warned that failure to accept the terms - set out after TfL submitted a request for a £4.9bn bailout - could lead to the central Government taking control of TfL.

It is understood that Mr Khan’s refusal to hike council tax could contradict options being considered by a panel of his own advisers. 

The mayor launched his own independent review into TfL in July after Boris Johnson’s administration handed him an initial £1.6bn grant to keep services running. 

Jonathan Taylor, former vice-president of the European Investment Bank, economist Bridget Rosewell, rail industry grandee Stephen Glaister and TC Chew of engineer Arup, are believed to have submitted their findings to Mr Khan on how TfL can balance its books.

One option considered was increasing council tax, sources said, with the experts highlighting a disparity with other major cities such as Manchester and Birmingham.

Another option could involve Mr Khan imposing a tax on sales to help fund public transport, as other major cities around the world have done.

The crisis in London follows a sharp fall in passenger numbers as a result of the coronavirus pandemic.

Roughly 70p in every pound it costs to run underground, bus and rail services across the capital comes from fares - twice as much as in Paris and New York.  

Both sides took an increasingly entrenched position as business leaders urged them to compromise.

Mr Johnson, Mr Khan’s predecessor as London Mayor, told the Commons that he "had effectively bankrupted Transport for London before" Covid-19 coronavirus pandemic even hit".

Mr Khan said this was a “blatant lie”.

He added: “Before Covid I was fixing his mess at TfL- reducing the deficit by 71pc since 2016… Covid-19 is the sole cause of TfL’s challenges."