Time to circle the wagons. There are smoke signals in the hills and the war drums are beating. The industry is facing its biggest challenge since the 1982 Serpell report, when there was a threat to reduce the network to a handful of core routes.
This time round, there is no immediate risk of a major closure programme, but the financial pressures which the industry faces are extraordinarily harsh. There are so far two messages to be decoded from the smoke signals. Firstly, the Treasury’s ‘Red Book’, the detailed figures underpinning the budget, allows £2 billion for additional Covid support for the rail industry in Quarter 1 of 2021-22 – but nothing thereafter. Whilst the funding for Quarter 1 will be enough to keep the trains running, there’s no realistic possibility of revenue being restored to pre-pandemic levels any time soon – with more home working and reduced high yield business travel, revenue will probably only recover to perhaps 75-80% of previous levels. Revenue at 80% of pre-pandemic levels equates to a shortfall of around £2 billion a year, or around £1.5 billion for the balance of 2021-22.
The Treasury is now calling the shots, and is likely to take the line that a 20% reduction in reven…
