Office for National Statistics to review train company classification

Train operators LNER and Northern are already in public ownership.

The Office for National Statistics (ONS), which collects, analyses and disseminates statistics about the UK’s economy, society and population, is reviewing how it classifies train operating companies.

In a statement released on 9 July 2020, it said: “In response to the coronavirus outbreak and the subsequent introduction of movement restrictions, the government announced emergency measures to ensure that the railways continued to operate in the circumstances of dramatically falling passenger numbers.

“Train operators with government franchise agreements had the opportunity to ‘temporarily transition’ onto Emergency Measures Agreements (EMAs), under which the normal financial franchise mechanisms were suspended (initially for six months), transferring all revenue and cost risk to the government.

“The train operators then continued to run day-to-day services for a small pre-determined management fee. Alongside transferring the financial risk to government, EMAs also imposed some obligations on the private train operating companies, in what is already a highly regulated industry.

“The ONS is therefore assessing if these new procedures should affect the statistical classification of the train operating companies within the UK national accounts. The result of the review will be announced as soon as possible.”

Northern and LNER are both public;y owned by DfT OLR Holdings Ltd.

The Financial Times ran with this story, but made it seem perhaps more definite than the ONS statement. While its report says, quite rightly, that the ONS is reviewing the classification status of train operating companies following the creation of emergency measures agreements between them and the government, the headline “ONS signals rail nationalisation with debt sheet move” and the comment “The technical reclassification has prompted concern among rail executives…” could make it seem like a forgone conclusion.

However, a spokesman for the ONS made it very clear to Rail Insider that no decision has been taken, and he wasn’t even in a position to say when it would be taken.  In addition, any reclassification would only refer to the position that applies right now.  If the situation changes in the future, such as in September when the EMAs are due to expire, then the classification could also change.

Manuel Cortes, TSSA.

The trade unions, who would anyway like to see the railways brought back into public ownership, have seized on the hints in the FT article.

“It’s good to see the Office for National Statistics tell the truth about what is blindly obvious – our railways are now in public ownership,” stated Manuel Cortes of TSSA.

“The government must end the charade of trying to say this is not happening. Instead Ministers should tell the truth and act forcefully to defend the interests of our taxpayers by running these services directly through a wholly owned subsidiary.”

The RMT union “demanded that the government end the charade of privatisation and the grotesque waste of franchising after it was confirmed that the Office for National Statistics have reclassified the debts of the private train operators as part of the public debt on the public sector balance sheet.”

However, the ONS has confirmed no such thing, only that it is deciding whether to change the statistical classification of the train operating companies within the UK national accounts.

Paul Plummer, Rail Delivery Group.

The train operators, of course, feel that remaining in the private sector, although perhaps in a different form, is the way to go. Paul Plummer, chief executive of the Rail Delivery Group, which represents train operators, said: “The prospect of reclassification underscores the need for a fundamental reset of the relationship between the public and private sectors in rail, something we have long been calling for and which the Williams review, yet to report, was set up to deliver.

“Government has an opportunity to accelerate the drive to a renewed system as it considers what replaces EMAs, which were put in place in as a short-term response to the pandemic, when they end in September.

“To ensure passenger numbers recover as quickly as possible, which is good for taxpayers, the economy and the environment, new contracts must lock in incentives for the private sector to grow revenue and run the railway safely and efficiently, while also enabling further reform.”

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