Connect with us

Published

on

TransPennine Express will not have its contract renewed or extended, the government has announced, after “months of… continuous cancellations”.

Transport Secretary Mark Harper has said that from 28 May, TransPennine Express will be brought into operator of last resort – essentially running the network on behalf of the government.

Its services cover northern England and also run in parts of Scotland.

Announcing the change, the government said: “The decision follows months of significant disruption and regular cancellations across TransPennine Express’s network, which has resulted in a considerable decline in confidence for passengers who rely on the trains to get to work, visit family and friends and go about their daily lives.”

Latest news:
Ministers ‘plan to stop family joining overseas students’

According to the government, this is now the fourth railway to be brought under government control – following the East Coast Mainline in June 2018, Northern Rail in March 2020 and London and South Eastern Railway in October 2021.

The process is part of the powers given to the government under the legislation which privatised the railways in 1993.

More on Rail

Recent figures from the Office of Road and Rail show that TPE cancelled an average of one in six services in March this year.

Read more:
Passengers facing ‘rail crisis’ as train cancellations hit record high, data shows
Leaked Network Rail presentation warns of worsening train delays and rising fares

It had been impacted by drivers no longer volunteering to work paid overtime shifts – but the government said there were also issues with “a backlog of recruitment and training drivers [and] reforming how the workforce operates”.

Mr Harper said: “In my time as transport secretary, I have been clear that passenger experience must always come first.

“After months of commuters and Northern businesses bearing the brunt of continuous cancellations, I’ve made the decision to bring TransPennine Express into operator of last resort.”

Mr Harper added that the decision was not a “silver bullet” to “instantaneously fix a number of challenges” – including drivers at the Aslef union who are “preventing” TPE from running a full service.

“We have played our part, but Aslef now need to play theirs by calling off strikes and the rest day working ban, putting the very fair and reasonable pay offer to a democratic vote of their member,” the secretary of state added.

A TransPennine Express train at Leeds train station.
Image:
The network had been plagued with delays

Government running TransPennine not a great look for levelling up


Tamara Cohen

Tamara Cohen

Political correspondent

@tamcohen

TransPennine Express is the latest franchise to be brought under public control, the government says only temporarily.

But it follows Southeastern, in 2021, after years of poor performance, Northern Rail in 2020, and LNER in 2018 after Virgin and Stagecoach could no longer make payments, now run by the operator of last resort.

For Labour – which has cheered the decision – it vindicates the policy they’ve announced of bringing all franchises into public hands as their contracts end, although some have many years to run.

The government say action by train drivers union Aslef, which has refused to allow overtime, has not helped. Rishi Sunak warned TransPennine operator FirstGroup they might lose the contract back in January, with Avanti West Coast also reported to be at risk.

The railways have not recovered from the pandemic in terms of passenger numbers, increased sick days and a backlog of training – as well as sustained industrial action.

Ministers say they are acting to help passengers. But with the government committed to levelling up and improving the connectivity of Northern cities – and Northern Powerhouse Rail already scaled back – it’s not the sign they wanted to send.

TPE had been operated by FirstGroup, and it too has sought to blame “challenging industrial relations” for the disruption.

A statement from the company said: “Following the introduction of an agreed recovery plan in February 2023, cancellations have fallen by approximately 40% and will continue to do so as more drivers become available over the next few months.

“The group is disappointed by the decision not to extend the national rail contract for TPE, given the investment and improvements we have made to the service over the years, which resulted in growing annual passenger numbers from 14m in 2004 to more than 29m before the pandemic.”

Labour has used the development to call for renationalisation of the railways.

Shadow business secretary Jonathan Reynolds – who is the MP for Stalybridge and Hyde in Greater Manchester – told Sky News that today’s actions reinforce his party’s plan to bring railways back into public ownership when current contracts expire.

And shadow transport secretary Louise Haigh said: “After months of needless damage, the Tories have finally accepted they can no longer defend the indefensible.

“But this endless cycle of shambolic private operators failing passengers shows the Conservative’s rail system is fundamentally broken.”

The action has been welcomed by MPs representing constituencies impacted by disruption to the services across political divides.

David Mundell, the Tory MP for Dumfriesshire in southern Scotland said: “Having lobbied for this outcome, I obviously welcome it. The service provided(or not) for my constituents at Lockerbie has been totally unacceptable and I had no confidence it would improve.”

Andy McDonald, the Labour MP for Middlesbrough on Teesside, said: “At last! Why this government allowed this miserable service to limp on so long is bewildering.

“But thank goodness they’ve eventually listened to what people in the North have been saying for years.”

Tracy Brabin, the Labour mayor of West Yorkshire, said the decision was “absolutely right” – and that she is looking forward “to hearing how the new operator intends to improve services”.

Continue Reading

Business

Chair candidates battle to check in at Premier Inn-owner Whitbread

Published

on

By

Chair candidates battle to check in at Premier Inn-owner Whitbread

Two chairs of FTSE-100 companies are vying to succeed Adam Crozier at the top of Whitbread, the London-listed group behind the Premier Inn hotel chain.

Sky News has learnt that Christine Hodgson, who chairs water company Severn Trent, and Andrew Martin, chair of the testing and inspection group Intertek, are the leading contenders for the Whitbread job.

Mr Crozier, who has chaired the leisure group since 2018, is expected to step down later this year.

The search, which has been taking place for several months, is expected to conclude in the coming weeks, according to one City source.

Ms Hodgson has some experience of the leisure industry, having served on the board of Ladbrokes Coral Group until 2017, while Mr Martin was a senior executive at the contract caterer Compass Group and finance chief at the travel agent First Choice Holidays.

Under Mr Crozier’s stewardship, Whitbread has been radically reshaped, selling its Costa Coffee subsidiary to The Coca-Cola Company in 2019 for nearly £4bn.

The company has also seen off an activist campaign spearheaded by Elliott Advisers, while Mr Crozier orchestrated the appointment of Dominic Paul, its chief executive, following Alison Brittain’s retirement.

More from Money

It said last year that it sees potential to grow the network from 86,000 UK bedrooms to 125,000 over the next decade or so.

Mr Crozier is one of Britain’s most seasoned boardroom figures, and now chairs BT Group and Kantar, the market research and data business backed by Bain Capital and WPP Group.

He previously ran the Football Association, ITV and – in between – Royal Mail Group.

On Friday, shares in Whitbread closed at £25.41, giving the company a market capitalisation of about £4.5bn.

Whitbread declined to comment this weekend.

Continue Reading

Business

Bank chiefs to Reeves: Ditch ring-fencing to boost UK economy

Published

on

By

Bank chiefs to Reeves: Ditch ring-fencing to boost UK economy

The bosses of four of Britain’s biggest banks are secretly urging the chancellor to ditch the most significant regulatory change imposed after the 2008 financial crisis, warning her its continued imposition is inhibiting UK economic growth.

Sky News has obtained an explosive letter sent this week by the chief executives of HSBC Holdings, Lloyds Banking Group, NatWest Group and Santander UK in which they argue that bank ring-fencing “is not only a drag on banks’ ability to support business and the economy, but is now redundant”.

The CEOs’ letter represents an unprecedented intervention by most of the UK’s major lenders to abolish a reform which cost them billions of pounds to implement and which was designed to make the banking system safer by separating groups’ high street retail operations from their riskier wholesale and investment banking activities.

Their request to Rachel Reeves, the chancellor, to abandon ring-fencing 15 years after it was conceived will be seen as a direct challenge to the government to take drastic action to support the economy during a period when it is forcing economic regulators to scrap red tape.

It will, however, ignite controversy among those who believe that ditching the UK’s most radical post-crisis reform risks exacerbating the consequences of any future banking industry meltdown.

In their letter to the chancellor, the quartet of bank chiefs told Ms Reeves that: “With global economic headwinds, it is crucial that, in support of its Industrial Strategy, the government’s Financial Services Growth and Competitiveness Strategy removes unnecessary constraints on the ability of UK banks to support businesses across the economy and sends the clearest possible signal to investors in the UK of your commitment to reform.

“While we welcomed the recent technical adjustments to the ring-fencing regime, we believe it is now imperative to go further.

More on Electoral Dysfunction

“Removing the ring-fencing regime is, we believe, among the most significant steps the government could take to ensure the prudential framework maximises the banking sector’s ability to support UK businesses and promote economic growth.”

Work on the letter is said to have been led by HSBC, whose new chief executive, Georges Elhedery, is among the signatories.

His counterparts at Lloyds, Charlie Nunn; NatWest’s Paul Thwaite; and Mike Regnier, who runs Santander UK, also signed it.

While Mr Thwaite in particular has been public in questioning the continued need for ring-fencing, the letter – sent on Tuesday – is the first time that such a collective argument has been put so forcefully.

The only notable absentee from the signatories is CS Venkatakrishnan, the Barclays chief executive, although he has publicly said in the past that ring-fencing is not a major financial headache for his bank.

Other industry executives have expressed scepticism about that stance given that ring-fencing’s origination was largely viewed as being an attempt to solve the conundrum posed by Barclays’ vast investment banking operations.

The introduction of ring-fencing forced UK-based lenders with a deposit base of at least £25bn to segregate their retail and investment banking arms, supposedly making them easier to manage in the event that one part of the business faced insolvency.

Banks spent billions of pounds designing and setting up their ring-fenced entities, with separate boards of directors appointed to each division.

More recently, the Treasury has moved to increase the deposit threshold from £25bn to £35bn, amid pressure from a number of faster-growing banks.

Sam Woods, the current chief executive of the main banking regulator, the Prudential Regulation Authority, was involved in formulating proposals published by the Sir John Vickers-led Independent Commission on Banking in 2011.

Legislation to establish ring-fencing was passed in the Financial Services Reform (Banking) Act 2013, and the regime came into effect in 2019.

In addition to ring-fencing, banks were forced to substantially increase the amount and quality of capital they held as a risk buffer, while they were also instructed to create so-called ‘living wills’ in the event that they ran into financial trouble.

The chancellor has repeatedly spoken of the need to regulate for growth rather than risk – a phrase the four banks hope will now persuade her to abandon ring-fencing.

Britain is the only major economy to have adopted such an approach to regulating its banking industry – a fact which the four bank chiefs say is now undermining UK competitiveness.

“Ring-fencing imposes significant and often overlooked costs on businesses, including SMEs, by exposing them to banking constraints not experienced by their international competitors, making it harder for them to scale and compete,” the letter said.

“Lending decisions and pricing are distorted as the considerable liquidity trapped inside the ring-fence can only be used for limited purposes.

“Corporate customers whose financial needs become more complex as they grow larger, more sophisticated, or engage in international trade, are adversely affected given the limits on services ring-fenced banks can provide.

“Removing ring-fencing would eliminate these cliff-edge effects and allow firms to obtain the full suite of products and services from a single bank, reducing administrative costs”.

In recent months, doubts have resurfaced about the commitment of Spanish banking giant Santander to its UK operations amid complaints about the costs of regulation and supervision.

The UK’s fifth-largest high street lender held tentative conversations about a sale to either Barclays or NatWest, although they did not progress to a formal stage.

HSBC, meanwhile, is particularly restless about the impact of ring-fencing on its business, given its sprawling international footprint.

“There has been a material decline in UK wholesale banking since ring-fencing was introduced, to the detriment of British businesses and the perception of the UK as an internationally orientated economy with a global financial centre,” the letter said.

“The regime causes capital inefficiencies and traps liquidity, preventing it from being deployed efficiently across Group entities.”

The four bosses called on Ms Reeves to use this summer’s Mansion House dinner – the City’s annual set-piece event – to deliver “a clear statement of intent…to abolish ring-fencing during this Parliament”.

Doing so, they argued, would “demonstrate the government’s determination to do what it takes to promote growth and send the strongest possible signal to investors of your commitment to the City and to strengthen the UK’s position as a leading international financial centre”.

Continue Reading

Business

Post Office to unveil £1.75bn banking deal with big British lenders

Published

on

By

Post Office to unveil £1.75bn banking deal with big British lenders

The Post Office will next week unveil a £1.75bn deal with dozens of banks which will allow their customers to continue using Britain’s biggest retail network.

Sky News has learnt the next Post Office banking framework will be launched next Wednesday, with an agreement that will deliver an additional £500m to the government-owned company.

Banking industry sources said on Friday the deal would be worth roughly £350m annually to the Post Office – an uplift from the existing £250m-a-year deal, which expires at the end of the year.

Money latest: ’14 million Britons on course for parking fine this year’

The sources added that in return for the additional payments, the Post Office would make a range of commitments to improving the service it provides to banks’ customers who use its branches.

Banks which participate in the arrangements include Barclays, HSBC, Lloyds Banking Group, NatWest Group and Santander UK.

Under the Banking Framework Agreement, the 30 banks and mutuals’ customers can access the Post Office’s 11,500 branches for a range of services, including depositing and withdrawing cash.

More on Post Office Scandal

The service is particularly valuable to those who still rely on physical cash after a decade in which well over 6,000 bank branches have been closed across Britain.

In 2023, more than £10bn worth of cash was withdrawn over the counter and £29bn in cash was deposited over the counter, the Post Office said last year.

Read more from Sky News:
Water regulation slammed by spending watchdog
Rate cut speculation lights up as economic outlook darkens

A new, longer-term deal with the banks comes at a critical time for the Post Office, which is trying to secure government funding to bolster the pay of thousands of sub-postmasters.

Reliant on an annual government subsidy, the reputation of the network’s previous management team was left in tatters by the Horizon IT scandal and the wrongful conviction of hundreds of sub-postmasters.

A Post Office spokesperson declined to comment ahead of next week’s announcement.

Continue Reading

Trending