Subsidy cut to put rail on track for state control

Negotiations have been further hampered by the Government rejecting  industry proposals for operators to be incentivised to cut costs, sources said.

A Government-sanctioned review of the railways by Keith Williams, the  former British Airways boss, billed as the most comprehensive analysis since privatisation, “may not see the light of day,” an industry source said.

It is understood that projections prepared by trade body the Rail Delivery Group, and shared with operators, forecast demand for train services will only recover to 90pc of pre-Covid levels in five years.

Matthew Gregory, boss of train firm FirstGroup, said: “Passenger volumes are not going to be anywhere near  sufficient to go back to where we were before. So they are going to have to continue [with] the level of support to keep everybody moving.

“The Government and the country needs them [emergency measures] to be extended for as long as it takes for the revenue to get back up to somewhere near prior levels. Otherwise you are going to have the rail industry effectively going bust and handed back.”

Whitehall has laid the groundwork for full nationalisation of the train  network since the onset of pandemic. Seven new state-owned shell companies were set up as a contingency to run failed train lines in England.

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