Taxpayers to pay £6m a day to keep trains on track

The Treasury will pay out another £2.1bn to help the railways, while Crossrail's completion has been funded

Taxpayers will fork out £5.8m a day next year to keep rail services running following concerns that demand for train travel will take years to return to pre-pandemic levels.

Rishi Sunak announced an estimated £2.1bn of subsidies for rail operators in 2021-22 in the Government’s Comprehensive Spending Review. It has already spent up to £9bn on the railways this year.

The bailout could balloon further, the Treasury warned. It “depends on future decisions about public health restrictions”, the spending documents said.

The rail subsidy contrasts sharply with Government support for buses. Mr Sunak allocated £300m to “drive transformation of bus services”. Some of this money could be used “for any further Covid-19 support”.

Graham Vidler, chief executive of the Confederation of Passenger Transport, which represents bus and coach operators, has previously called for at least £500m to support services next year.

While a “welcome step”, Mr Vidler said the money “falls short of what is needed by the country’s most used form of public transport”. “Buses can play a vital role in delivering a green recovery but today’s investment is in stark contrast to the record levels of investment in our road and rail networks,” he said. 

“Bus will be central to the country’s economic recovery and deliver on vital environmental goals. Further investment in the short term, on top of some of today’s longer term commitments, will be required to enable it to play its full part.”

The Exchequer handed buses, light rail, cycling and Transport for London a total of £4.8bn in the current fiscal year. Included in this figure is a £3.4bn bailout of the capital's transport network after a bitter row between the authority's chairman Sadiq Khan, the London mayor, and Boris Johnson.

A spokesman for the London mayor said: “TfL still expects to need around £3bn of support from the Government in the next financial year. While this may ultimately vary depending upon future passenger numbers, it is why the Mayor fought for an 18-month deal in contrast to the six-month deal the Government provided."

With passenger numbers peaking at around a third of pre-pandemic levels as restrictions were eased over the summer, questions will be raised whether the £2.1bn pledged by Mr Sunak for next year will be enough.

Confidential forecasts made by train operators in July showed that passenger numbers may take five years to return to 2019 levels. The Department for Transport is understood to be under increasing pressure from the Treasury to reduce what is the biggest industry-specific subsidy.

Updated emergency contracts, agreed in September, have reduced fees paid to rail operators and incentivised them to deliver better services. Meanwhile, transport officials are locked in talks to recoup up to £500m from rail operators in penalties.  

Robert Nisbet, director of nations and regions at the Rail Delivery Group, which represents train operators, said: “Given the crucial role the railways will play in the economic recovery next year, continued investment to keep services running is crucial so the network is ready when passengers return.

“Equally vital is funding to deliver the improvements that will improve journeys for passengers and support economic regrowth in communities across the country.”

Read more of our Spending Review coverage:

Crossrail funding agreed

Meanwhile, ministers committed to funding the rest of the £19bn Crossrail project that has been blighted by delays and budgetary blowouts.

The National Infrastructure Strategy, published alongside Rishi Sunak’s Comprehensive Spending Review, reveals that the Government will finance “the completion of Crossrail” in return for Crossrail 2 to be stopped.

Last weekend the future of Europe’s biggest construction project was thrown into doubt after Transport for London commissioner Andy Byford demanded £80m of urgent funding to avoid Crossrail being “mothballed”.

Although the National Infrastructure Strategy makes no specific reference to the £80m needed, the document, a key plank Boris Johnson’s plans to “build back better”, is the first sign that funds will be made available to complete the works. 

Crossrail, originally due to open in December 2018 and cost around £15bn, has been beset by problems in recent years.

Getting signalling equipment housed in Crossrail’s 13 mile-long tunnel to function correctly has been the project’s biggest issue in recent years. Now scheduled to open between January and June 2022, London transport bosses have been lobbying Westminster for an additional £1.1bn to complete the work. 

The National Infrastructure Strategy states: “The Government is continuing to address capacity issues in the capital, by financing the completion of Crossrail, but has agreed that Transport for London will stop development on Crossrail 2. This frees up investment to raise the performance of public transport networks in the regional cities towards London’s gold standard."

A spokesman for TfL said: “We welcome the commitment from the Chancellor as part of today’s spending review on financing the completion of Crossrail. We now need to have urgent discussions to ensure the funding can be in place as soon as possible to allow the project to continue.”