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Troubled East Coast main line taken back into public hands
THE troubled East Coast Main Line is back in public hands after the Government last night took control of the ailing franchise following the successive failures of two private operators.
Transport boss Lord Adonis has insisted that the franchising system still offers the best deal for customers, dismissing calls from unions that the rail network should be permanently returned to state ownership.
The company set up by the Department for Transport (DfT) to run East Coast, Directly Operated Rail, will continue to pay a premium in the same way as National Express and GNER did before it, but at a much lower price. Part of the profits will also go to the Government and in 2011 another private company will attempt to run the franchise.
Chairman Elaine Holt admitted passengers would be hit in the new year with price rises on unregulated fares but said regulated tickets should fall 1.4 per cent and a seat reservation charge would be abolished.
Ms Holt also denied the franchise was being nationalised, she said: "Our company is an arms-length company. Nobody from the Department for Transport is on the board.
"This business will be run as a commercial operation. We will be returning some of the profits we make to the Government and the taxpayer."
She sought to reassure rail workers in York that they would all be able to work for the new company and denied it would be spending 1m on rebranding and a new livery for the service – saying the amount was "in the region of 100,000".
National Express won the franchise in 2007, after it was surrendered by GNER. It agreed to pay the Government 1.3bn in premium payments.
Lord Adonis is reviewing the national franchise system amid claims from business leaders that the contracts are too short and regulations prevent Government assistance for operators at the time when they are most vulnerable.
The franchise contract stipulates that operators are only eligible for Government assistance after four years, however the Leeds, York and North Yorkshire Chamber of Commerce has said this is the time they need it most.
Lord Adonis is also carrying out a review into why the line failed to run successfully for the second time in as many years.
He said: "Part of the reason to keep the East Coast line for two years is it gives me an opportunity to complete the review before publishing the specifications for the new East Coast franchise. We will do a proper evaluation of why the East Coast line didn't work out, it has now ended prematurely twice and it is right that we understand the reasons why that happened.
"The company made a substantial profit last year, the reason why they were making a loss was because of the level of the premium payments which they had committed to pay the government. The new East Coast company won't pay a premium over their profits."
He went on to defend the franchising system, ruling out any return to the nationalisation of the rail network.
The Government also announced 12m worth of improvements on the line, including catering improvements, cleaner stations, more weekend services and withdrawal of planned gating at York station in order to maintain the existing through access for non-passengers, while accelerating completion of gating at King's Cross to deter fare-dodgers.
Shadow Transport Secretary Theresa Villiers said: "On day one of a nationalised service we are already seeing fare hikes and large sums of money spent on frills such as livery.
"What passengers on the East Coast will demand is better value for money, not better paint on their trains. This line should be returned to private hands as soon as is practical."
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Saturday 26 May 2012
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