East Coast line re-privatised amid slanging

To critics, the government’s decision to re-privatise the East Coast Mainline after five years successful operation in the public sector will be seen as a rail franchise award being played out with a rigged deck of Tory political dogma. Privatisation good, public sector bad.

Martin Flanagan

Particularly as the two previous operators of the Edinburgh to London line, GNER and National Express, had to pull out of their franchises because of financial and operational issues, and it was public sector ownership since 2009 that got the East Coast back on track.

You also had the curious situation of one of the bidders for the franchise being French state railway SNCF through its majority ownership of Keolis and Eurostar, while our own one public sector operator – established as one of the best train operators in the country – sat on the sidelines.

East Coast Mainline has put £1 billion into the Treasury’s coffers since it stepped into the void left by National Express – £217m of it in the 12 months to last March.

Instead, the winning bidder is a consortium of Virgin Group and Perth-based Stagecoach, run by Sir Richard Branson and Sir Brian Souter respectively, while another losing bid was from FirstGroup, which is making something of a habit of losing out on big railway franchises, including ScotRail.

It is all a bit messy, with the trade unions and Labour party appearing as political as the government on both sides of the rail privatisation divide since the mid-1990s.

One argument not self-evidently true is that it is a bad outcome for commuters because Virgin Rail, again a Branson/Souter business, already runs the West Coast mainline and so will have a monopoly of the two main routes between Scotland and London.

The truth is that the West Coast and East Coast rail services don’t compete against each other – passengers are travelling to different destinations on either sides of the country with no overlap.

With some justification, the winning bidder could argue its real competition is with the airlines and car travel rather than between its two main artery routes.

The government says the new franchise, to be called Inter City Railways, will pay £3.3bn to the taxpayer for the eight-year contract, and the new franchisees are making some impressive promises on investment, improved trains, extra seats, extra services, improved punctuality etc.

It does not necessarily mean all will be glory days. Some consumer groups say Virgin charges some of the highest peak fares in Britain on the West Coast, and even though it has sharply improved its act in recent years it also had its share of bad rail public relations early in the franchise awarded in 1997.

Whatever the outcome, the birth of the new Inter City Railways will also be remembered for a stark throwback to the privatisation debate of the 1980s and 1990s.

Funding for Lending useful but not panacea

The news that the Funding for Lending Scheme (FLS) for small businesses has not been able to staunch the decline in bank and building society loans to that sector is a little depressing.

It is still a worthwhile Bank of England flagship, however, even if in the wider shape of things it is making incremental improvements for financial accessibility rather than stellar ones.