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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.”

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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.

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

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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.
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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”.

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Lloyds Banking Group in talks to buy digital wallet provider Curve

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Lloyds Banking Group in talks to buy digital wallet provider Curve

Britain’s biggest high street bank is in talks to buy Curve, the digital wallet provider, amid growing regulatory pressure on Apple to open its payment services to rivals.

Sky News has learnt that Lloyds Banking Group is in advanced discussions to acquire Curve for a price believed to be up to £120m.

City sources said this weekend that if the negotiations were successfully concluded, a deal could be announced by the end of September.

Curve was founded by Shachar Bialick, a former Israeli special forces soldier, in 2016.

Three years later, he told an interviewer: “In 10 years time we are going to be IPOed [listed on the public equity markets]… and hopefully worth around $50bn to $60bn.”

One insider said this weekend that Curve was being advised by KBW, part of the investment bank Stifel, on the discussions with Lloyds.

If a mooted price range of £100m-£120m turns out to be accurate, that would represent a lower valuation than the £133m Curve raised in its Series C funding round, which concluded in 2023.

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That round included backing from Britannia, IDC Ventures, Cercano Management – the venture arm of Microsoft co-founder Paul Allen’s estate – and Outward VC.

It was also reported to have raised more than £40m last year, while reducing employee numbers and suspending its US expansion.

In total, the company has raised more than £200m in equity since it was founded.

Curve has been positioned as a rival to Apple Pay in recent years, having initially launched as an app enabling consumers to combine their debit and credit cards in a single wallet.

One source close to the prospective deal said that Lloyds had identified Curve as a strategically attractive bid target as it pushes deeper into payments infrastructure under chief executive Charlie Nunn.

Lloyds is also said to believe that Curve would be a financially rational asset to own because of the fees Apple charges consumers to use its Apple Pay service.

In March, the Financial Conduct Authority and Payment Systems Regulator began working with the Competition and Markets Authority to examine the implications of the growth of digital wallets owned by Apple and Google.

Lloyds owns stakes in a number of fintechs, including the banking-as-a-service platform ThoughtMachine, but has set expanding its tech capabilities as a key strategic objective.

The group employs more than 70,000 people and operates more than 750 branches across Britain.

Curve is chaired by Lord Fink, the former Man Group chief executive who has become a prolific investor in British technology start-ups.

When he was appointed to the role in January, he said: “Working alongside Curve as an investor, I have had a ringside seat to the company’s unassailable and well-earned rise.

“Beginning as a card which combines all your cards into one, to the all-encompassing digital wallet it has evolved into, Curve offers a transformative financial management experience to its users.

“I am proud to have been part of the journey so far, and welcome the chance to support the company through its next, very significant period of growth.”

IDC Ventures, one of the investors in Curve’s Series C funding round, said at the time of its last major fundraising: “Thanks to their unique technology…they have the capability to intercept the transaction and supercharge the customer experience, with its Double Dip Rewards, [and] eliminating nasty hidden fees.

“And they do it seamlessly, without any need for the customer to change the cards they pay with.”

News of the talks between Lloyds and Curve comes days before Rachel Reeves, the chancellor, is expected to outline plans to bolster Britain’s fintech sector by endorsing a concierge service to match start-ups with investors.

Lord Fink declined to comment when contacted by Sky News on Saturday morning, while Curve did not respond to an enquiry sent by email.

Lloyds also declined to comment, while Stifel KBW could not be reached for comment.

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UK economy figures not as bad as they look despite GDP fall, analysts say

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UK economy figures not as bad as they look despite GDP fall, analysts say

The UK economy unexpectedly shrank in May, even after the worst of Donald Trump’s tariffs were paused, official figures showed.

A standard measure of economic growth, gross domestic product (GDP), contracted 0.1% in May, according to the Office for National Statistics (ONS).

Rather than a fall being anticipated, growth of 0.1% was forecast by economists polled by Reuters as big falls in production and construction were seen.

It followed a 0.3% contraction in April, when Mr Trump announced his country-specific tariffs and sparked a global trade war.

A 90-day pause on these import taxes, which has been extended, allowed more normality to resume.

This was borne out by other figures released by the ONS on Friday.

Exports to the United States rose £300m but “remained relatively low” following a “substantial decrease” in April, the data said.

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Overall, there was a “large rise in goods imports and a fall in goods exports”.

A ‘disappointing’ but mixed picture

It’s “disappointing” news, Chancellor Rachel Reeves said. She and the government as a whole have repeatedly said growing the economy was their number one priority.

“I am determined to kickstart economic growth and deliver on that promise”, she added.

But the picture was not all bad.

Growth recorded in March was revised upwards, further indicating that companies invested to prepare for tariffs. Rather than GDP of 0.2%, the ONS said on Friday the figure was actually 0.4%.

It showed businesses moved forward activity to be ready for the extra taxes. Businesses were hit with higher employer national insurance contributions in April.

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The expansion in March means the economy still grew when the three months are looked at together.

While an interest rate cut in August had already been expected, investors upped their bets of a 0.25 percentage point fall in the Bank of England’s base interest rate.

Such a cut would bring down the rate to 4% and make borrowing cheaper.

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Is Britain going bankrupt?

Analysts from economic research firm Pantheon Macro said the data was not as bad as it looked.

“The size of the manufacturing drop looks erratic to us and should partly unwind… There are signs that GDP growth can rebound in June”, said Pantheon’s chief UK economist, Rob Wood.

Why did the economy shrink?

The drops in manufacturing came mostly due to slowed car-making, less oil and gas extraction and the pharmaceutical industry.

The fall was not larger because the services industry – the largest part of the economy – expanded, with law firms and computer programmers having a good month.

It made up for a “very weak” month for retailers, the ONS said.

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UK economy remains fragile – and there are risks and traps lurking around the corner

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UK economy remains fragile - and there are risks and traps lurking around the corner

Monthly Gross Domestic Product (GDP) figures are volatile and, on their own, don’t tell us much.

However, the picture emerging a year since the election of the Labour government is not hugely comforting.

This is a government that promised to turbocharge economic growth, the key to improving livelihoods and the public finances. Instead, the economy is mainly flatlining.

Output shrank in May by 0.1%. That followed a 0.3% drop in April.

Ministers were celebrating a few months ago as data showed the economy grew by 0.7% in the first quarter.

Hangover from artificial growth

However, the subsequent data has shown us that much of that growth was artificial, with businesses racing to get orders out of the door to beat the possible introduction of tariffs. Property transactions were also brought forward to beat stamp duty changes.

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In April, we experienced the hangover as orders and industrial output dropped. Services also struggled as demand for legal and conveyancing services dropped after the stamp duty changes.

Many of those distortions have now been smoothed out, but the manufacturing sector still struggled in May.

Signs of recovery

Manufacturing output fell by 1% in May, but more up-to-date data suggests the sector is recovering.

“We expect both cars and pharma output to improve as the UK-US trade deal comes into force and the volatility unwinds,” economists at Pantheon Macroeconomics said.

Meanwhile, the services sector eked out growth of 0.1%.

A 2.7% month-to-month fall in retail sales suppressed growth in the sector, but that should improve with hot weather likely to boost demand at restaurants and pubs.

Struggles ahead

It is unlikely, however, to massively shift the dial for the economy, the kind of shift the Labour government has promised and needs in order to give it some breathing room against its fiscal rules.

The economy remains fragile, and there are risks and traps lurking around the corner.

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Is Britain going bankrupt?

Concerns that the chancellor, Rachel Reeves, is considering tax hikes could weigh on consumer confidence, at a time when businesses are already scaling back hiring because of national insurance tax hikes.

Inflation is also expected to climb in the second half of the year, further weighing on consumers and businesses.

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