The Welsh Government is preparing to announce that it will take full ownership of Transport for Wales Rail after bailout talks with the current joint operator broke down, according to reports.
The decision to nationalise the railway in Wales is understood to be the result of a collapse in bailout talks with Keolis-Amey, who took over the franchise from Arriva in 2018.
According to The Telegraph, a fall in passenger numbers on the Wales and Borders services due to the coronavirus crisis has had a big impact on operations.
The Welsh Government have not denied the reports and WalesOnline understands an announcement will be made on Thursday morning.
A spokesman said: “The Minister for Economy, Transport and North Wales will tomorrow announce a series of measures to protect services for rail passengers, maintain jobs, and keep momentum on the Metro project, in light of the ongoing coronavirus pandemic.”
Transport for Wales Rail is currently run by Keolis-Amey, while Transport for Wales is a not-for-profit company owned by the Welsh Government.
The company previously oversaw the issuance and upkeep of the Wales and Borders franchise but are now set to take full control of the rail service.
Professor Stuart Cole, one of Wales and the UK’s leading experts in transport economics described the takeover as a major change.
“You might say it is going back to the days of British Railway,” he said.
Discussing the reasoning behind the takeover, Professor Cole said: “My understanding of it is that clearly the revenue that was expected to come into the franchises when the bid for the operations was made has turned out to be considerably less following the Covid crisis, but the costs largely remain the same.
“They still have the trains and maintain the services, but the passengers are not there.”
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Most of Wales’ rail tracks are owned by Network Rail, which is owned by the UK Government, but the Welsh Government owns the South Wales Valleys lines.
According to Professor Cole by taking over the franchise every operational part of the railway will now be run by the Welsh Government
“Everything the traveller sees will be operated by the Welsh Government.
“They probably won’t like the word nationalise, but that is what in effect has happened.”
According to Professor Cole, the renationalising of the railways has long been a desire for the Welsh Government but Westminster laws prevented them from bidding for the 2018 contract, despite the companies that did bid being owned by four countries – Hong Kong, Germany, France and the Netherlands.
“But I don’t think at this point in time it was the Government’s desire to take over the railways, it is because of Covid,” Professor Cole added.
While the takeover will take time it could lead to the development of integrated ticket travel.
This means a person will be able to purchase a ticket from one destination to another or use a travel card which can be used across buses and trains, without having to purchase individual tickets for journeys.
Franchises like Keolis-Amey would be reluctant to introduce a service like this unless it was part of their bid package or it offered a commercial benefit. But a publicly owned company, which Transport for Wales will be under the Welsh Government, would view these initiatives differently.
The Welsh Government could look to country’s like the Netherlands where a similar system exists.
Financially, the takeover makes sense because the Welsh Government already subsidises travel in Wales.
Professor Cole added: “Before Covid-19, the last figures I saw for running the Wales and Borders services was around £360 million.
“The Welsh Government give around £180 million in subsidies, and they just gave a £50 million extra (in emergency coronavirus support.)
“We were always on the way to a nationalise railway but sadly it was the coronavirus that has pushed all the railways, not just in Wales, into a position where the Government has had to take far more control.
“Essentially, the Welsh Government have taken over the revenue and costs.
“It is the transfer from the ownership and management from a franchise to a public sector company owned by a government company.”