Reclassification was announced today, though
the letter to HM Treasury is dated 27th July.
The reasons are stated thus:
ONS» assessed TOCs▸ in the context of the internationally-agreed rules laid out in the European System of Accounts (ESA) 2010 and the accompanying Manual on Government Deficit and Debt (MGDD) 2019.
The assessment noted that,
• The EMAs place constraints on the capacity of the TOCs to raise funds: specifically, the EMAs prevent the TOCs from being able to borrow any sum, or enter into any loan or lending agreement for the purpose of borrowing from any person
• The main reason the train services continue to run is because it is government policy to ensure the continuation of these rail services. Some of the open-access operators not included within the EMA package have suspended services
• Almost all of the financial risks associated with rail transport are now borne by the government
• For the duration of the EMAs, without the permission of the Secretary of State for Transport TOCs cannot take key decisions that relate to their corporate policy such as increasing their workforce or reducing their workforce by more than 5%, or setting ticket prices lower than they were immediately before EMAs came into place
Having also noted that control over an institutional unit does not require interventions in its day-to-day business (see MGDD 2019 1.2.3.1, 24), the assessment concluded that public sector control of TOCs exists.
The one thing I was expecting in that list, guaranteeing the TOCs loans, isn't there. It's sort of implied in the other points, but it is the classic reason for doing this.
I'm puzzled too that they are so keen to do a sector flip in response to a temporary measure - I though shifting things between sectors screwed up the National Accounts and would be put off until unavoidable.
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