East coast rail link to London should stay in state hands – MPs

SCOTLAND to London trains on the east coast main line should stay in government hands after their struggling operator abandons the franchise, MPs urged today.

The Commons transport committee said the National Express East Coast contract should remain renationalised to act as a performance yardstick against other franchises.

The call follows ministers stating the service would be publicly-run for only about a year after National Express pulls out, which is expected this autumn.

The interim measure is to provide time for a new franchise to be devised, which firms would then lodge bids to run.

National Express said this month it would be unable to keep up payments to the government for the franchise because of lower than expected passenger growth caused by the recession. The operator won the contract two years ago when it agreed to pay 1.4 billion over its seven-year term including 125 million this year.

MPs said another train franchise – South Eastern – had been successfully run by the government for two years after operator Connex was stripped of the contract in 2003.

Today's committee report stated: "Now is an ideal opportunity to keep the lucrative east coast franchise in the public sector. The service could then be used as a comparator for other types of franchises, both in terms of financial viability and passenger service quality."

The call was backed by the largest rail union. Bob Crow, general secretary of the Rail Maritime and Transport union, said: "We agree with the committee the east coast line should be renationalised on a permanent basis. However, we also believe the franchise mess is beyond reform and the only real solution is a return to public ownership of our railways."

Inter-city trains on the east coast main line, between Edinburgh, Glasgow, Inverness, Aberdeen and London, have been privately-run since former operator GNER took them over from British Rail in 1996.

The report also said fares had increased "out of all proportion to the real economy", and rises on some routes of more than 11 per cent when inflation was nearly zero was not acceptable.

Anthony Smith, chief executive of Passenger Focus, the official watchdog, said: "It is difficult to see how the system of awarding franchising based on high bids, high fares, high passenger growth and high premiums paid to government can continue.

"The economic climate has changed and passengers are getting squeezed in the middle."

The MPs report also described as "sharp practice" the creation of 'special purpose vehicles' to run franchises – such as by National Express for the east coast contract – to limit their liability for losses.

Transport Secretary Lord Adonis said the current system of competitive bids provided "a good deal for the taxpayer".

However, in response to the report, he said: "I am considering reforms including longer franchises and of the special purpose vehicle model for managing individual rail businesses. I intend to consider these issues fully before re-letting the east coast main line franchise next year."

BIDDING WAR?

PERTH-BASED transport group Stagecoach is understood to be on the brink of entering the contest for rival National Express, with a 1.5 billion all-share merger plan.

National Express confirmed last Friday it had received an indicative takeover proposal from the Cosmen/CVC consortium.