Chris Marshall: Getting trains back on track

Published on Thursday 2 July 2009 10:09

AFTER years of being as popular with our political rulers as a slap in the face with a wet fish, nationalisation suddenly seems to be all the rage again.

First came the banks, now the state is to take over the running of the East Coast Main Line.

Like the bank nationalisations, the move announced by Lord Adonis yesterday is set to be a temporary fix.

The once coveted rail franchise will be run by the government only until it is put out to tender again next year.

Despite its temporary nature, the move has already raised hopes and expectations among increasingly gloomy travellers and rail staff.

National Express staff, reportedly on the brink of industrial action after raising safety concerns about the operator's cuts, are now said to be back in the fold.

Passengers too can look forward with some guarded optimism.

National Express's decision to walk away from the East Coast Main Line just two years after forking out 1.4 billion for the franchise was no surprise.

For months the company has been "toiling" under the weight of its massive financial commitment, leading to a number of cuts to the service.

The intervention of the recession means the new owners will not pay anywhere near the sum National Express shelled. Some reports suggest the final figure could be around half the 1.4bn.

That should mean passengers seeing some benefit, with the new firm under far less pressure to milk the contract for all its worth. That, in theory at least, could lead to lower fares and/or improved on-board services.

It is unclear at this stage what changes passengers might see when the service passes into the control of the publicly -owned East Coast Main Line Company. Most likely there will be little, as the company prepares for an "orderly handover" to a new private firm.

Existing staff and assets tied up with the route will transfer to the new company. However, so too will at least some of the commercial pressures.

There may be some respite, though, from the cuts made under National Express' tenure. Those included a bid to save 15 million by reducing staff numbers, cutting the opening hours of ticket offices and scrapping on-board catering.

The company further angered put-upon passengers earlier this year when it introduced a 5 seat reservation fee.

Union leaders have already called for the flagship route to stay in public hands indefinitely, while Virgin, one of the firms expected to be interested in the route, said the government should now carry out a thorough review of the franchising system.

Anthony Smith, chief executive of independent watchdog Passenger Focus, says it was the customer who had suffered under the weight of the 1.4bn deal.

"This brings an end to a period of uncertainty as passengers became increasingly squeezed between government and the train operating company in an unrealistic deal. Passengers will welcome the assurances from government that the level and service quality will not suffer.

He adds: "Now we must begin the task of building a new franchise that puts passenger needs first."

Yesterday's intervention by Lord Adonis came amid stalling passenger growth and a steep decline in the number of first-class travellers.

The government will now tender for a new franchise operator from the end of 2010, but could face a legal battle with National Express over its decision to walk away from the deal.

The company says it has taken legal advice and believes the Department for Transport would not have the right to recover losses from the breach of the franchise agreement, or take over its other, more successful rail contracts.

Indeed, the government is more the architect of the mess, according to Lawrence Marshall of the Capital Rail Action Group.

He says: "Whilst the UK government is right not to have renegotiated the National Express East Coast franchise, my sympathy lies more with National Express. The government never learned the lesson of the collapse of the previous GNER franchise and were simply too greedy, encouraging an unsustainable bidding war.

"Given that, it would now make sense for the taxpayer to reap the benefits of operating the East Coast and, in doing so, provide a useful public sector comparator with franchised operations on the rest of the rail network."

National Express said its East Coast operation was expected to lose 20m in the first six months of this year alone.

While the faltering economy has no doubt done for National Express, things could have been so much different.

The decline in business class travel and the woes faced by the likes of British Airways could have proved a boon for the rail operator. Instead, fares continued to rise, with the budget airlines often offering competitive prices and quicker journey times.

The company's website was no longer taking inquiries about the East Coast Main Line yesterday, but earlier this year the cheapest return ticket from Edinburgh to London cost 96, while a return flight with EasyJet from Edinburgh to Gatwick was 90.

Whatever the future of the route, it is lower fares that passengers will be hoping for in order to get things back on track.