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New video: Taxpayer gets £40m bill for rail line takeover
THR Government will be left with a black hole costing up to £700m after stripping the contract to run Yorkshire to London trains from National Express yesterday.
National Express: Full coverage
Calculations show that taxpayers will have to fund at least 40m this year to run services along the East Coast main line – and that figure could rise by hundreds of millions if the Government cannot find another bidder for the franchise.
Industry analysts believe that Ministers will only be able to raise half the 1.4bn National Express East Coast (NXEC) agreed to pay for the eight-year franchise in 2007 when it is re-let – costing taxpayers up to 700m.
Last night concerns were raised that either taxes will have to go up, services will have to be cut or long-term projects to increase capacity on the over-crowded line will need to be scrapped to pay for taking the franchise into public ownership.
A spokesman for the Department for Transport (DfT) said that while the Government would have to pick up the costs, no-one had yet calculated the figures.
"We're not anticipating any impact on services or future projects at this stage," he added.
Prime Minister Gordon Brown said: "Our first and overriding obligation is to ensure continuity of service to the passengers and that there is no disruption of services."
NXEC said yesterday in a trading statement that it would hand back its franchise to the Government because it was expecting to lose over 20m in the first half of the year.
This financial year it is due to pay 125.4m to the DfT but cannot meet its commitments as revenue falls in the recession.
The Government hopes to keep the franchise in public hands for no more than a year but if revenue continues flatlining that will see taxpayers at least 40m out of pocket. The longer the service remains in public ownership the more it will cost.
The Yorkshire Post understands that a York-based consultancy of railway experts has held talks with the Government about taking over the troubled line. It is thought that either First Class Partnerships will run it temporarily or help to prepare it for public ownership.
York Council leader Andrew Waller said it was vital that all 3,100 NXEC workers in the city had their jobs guaranteed after the switch to public ownership.
He said: "I am determined that York should remain a railway city, and I will do all that I can to fight for York jobs."
Transport Secretary Lord Adonis condemned National Express's decision to walk away from its commitments as "regrettable and disappointing".
In a statement to the Lords, he said: "It is simply unacceptable to reap the benefits of contracts when times are good only to walk away from them when times become more challenging."
He said the new company would be called East Coast Main Line Company and would be run by Elaine Holt, previously in charge of London commuter line First Capital Connect.
Yorkshire Minister Rosie Winterton – MP for Doncaster Central – said she will meet Lord Adonis to discuss implications for the region.
It is known that the Government wants to return the franchise to private hands within a year and has already drawn up projections for how much it can expect from a new bidder.
MAIN POINTS AT A GLANCE
National Express East Coast losing 20m every half year on franchise
Concerns over how taxpayers will pay for shortfall when control is handed back
Worries over the future of 3,100 staff working out of Yorkshire headquarters
Government plans no changes for ticket pricing under its control
York-based company to be brought in to advise Government on next moves
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Saturday 26 May 2012
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