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By Sarah Young
LONDON, Sept 21 (Reuters) - Britain extended state support
to keep its rail network moving during the pandemic, providing
private train companies with less lucrative temporary contracts
ahead of a shake-up of the way the system operates.
The government avoided a full nationalisation but said it
would eventually introduce a new model to replace a discredited
franchise system that had led to the collapse of some services,
high prices and - prior to COVID - overcrowded trains.
Britain privatised its railways in the 1990s with a
franchising model that paid out to companies including UK-listed
FirstGroup and Go-Ahead as well as Arriva, owned
by German state-owned Deutsche Bahn and Abellio, owned
by the Dutch national rail operator.
"The model of privatisation adopted 25 years ago has seen
significant rises in passenger numbers, but this pandemic has
proven that it is no longer working," Transport minister Grant
Shapps said in a statement.
Under temporary new deals announced on Monday, train
operators will be paid management fees of a maximum of 1.5% of
the cost base of the contract pre-pandemic, lower than the
around 2% fee included in earlier emergency contracts, for
short-term contracts of around a year.
Passenger numbers dropped by as much as 90% at the height of
the pandemic as public transport was reserved for key workers.
While numbers have risen in recent weeks, there are fears they
could fall again as the virus accelerates.
The taxpayer will need to prop up the railways until
passenger numbers return, the government said on Monday. It has
spent about 3.5 billion pounds ($4.53 billion) subsidising its
railway in the last six months according to estimates.
Working from home has become the norm for many Britons
during the pandemic, and rail expert Michael Holden warned that
commuter numbers would never return to their pre-pandemic highs.
"I don't think we will ever, certainly not for the next few
years, return to the levels of demand for commuting travel that
we saw in the period leading up to February," he told BBC radio.
Once the course of the pandemic becomes clearer, the
government said it would publish details of the new system of
railway contracts.
($1 = 0.77 pounds)
(Reporting by Sarah Young; editing by Kate Holton and Angus
MacSwan)