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Industry reacts to the official end of rail franchising

Steven Carden, Global Head of Transport Innovation at PA Consulting, discusses the Department for Transport (DfT) announcement that sees the end of UK rail franchising after 24 years.

Ministers today ended rail franchising after 24 years as the first step in bringing Britain’s fragmented network back together. The new system, creating a simpler and more effective structure, will take shape over the coming months. The first stage, today, is moving operators onto transitional contracts to prepare the ground for the new railway.

From this morning, franchising is replaced with more demanding Emergency Recovery Management Agreements (ERMAs). These address the continuing impact of the pandemic on the railway and delivers on a Government commitment to replace the current franchising system.

These management agreements have tougher performance targets and lower management fees. The new contracts allow us to make an early start on key reforms, including requiring operators to co-ordinate better with each other and driving down the railways; excessive capital costs.

Management fees will now be a maximum of 1.5 per cent of the cost base of the franchise before the pandemic began. The ERMAs are a transitional stage to the new system, the biggest change to the railways in a quarter of a century.

Under current public health guidance, the intention is also for operators to run an almost full service, to ensure there is space to help passengers travel safely.

ERMAs pave the way for wider rail industry reform that prioritises the passenger. In 2018 Keith Williams, the chairman of Royal Mail, was asked to review the railways after a chaotic timetable change and the failure of some franchises.

Steven commented: "The move by DfT to a ‘simpler and more effective structure’ of management contracts for the UK’s railways might well be the ‘biggest change to the railways in a quarter of a century’, but it is not enough.  The current assumptions around the purpose of the rail network need to change – until now, one of the core missions for rail is to move volume – of passengers and freight.  That volume may or may not come back and the UK’s rail system needs to recognise that it is a possibility that volume does not come back, and to build agility and flexibility into the system."

Steven continues: "A lot of the focus is, rightly, on ticketing as a means of building in agility, but the DfT should also consider things like how to make the timetable more flexible; how to form trains in a more responsive and agile way; how to test innovation on the network so that it can be deployed more quickly and rolled out; and how to take advantage of train operating companies being less competitive to provide a better and more joined-up passenger experience across the UK. Now is not the time to fall back on a slightly different operating model for the railway – now is the time to introduce a more radical shift in what rail means for the UK."

Read the article in full in Rail Professional Magazine.

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