NOW we know that the East Coast Main rail line between Edinburgh and London is being brought under UK government control, it might be useful to take a journey back to November 2014. That’s when it was first announced that the partnership of Stagecoach Group and Virgin had been awarded the franchise, starting in 2015. The Transport Secretary at the time, Patrick McLoughlin, said it was a fantastic deal for passengers and staff. “I believe Stagecoach and Virgin will not only deliver for customers, but also for the British taxpayer,” he said.
Three years on, Mr McLoughlin’s words now look ridiculous. The Stagecoach/Virgin contract was due to run until 2023, but instead the Government has called a halt to the East Coast franchise – not for the first time – and is to take it into state control. The current Transport Secretary Chris Grayling said the longer term aim was to create a public/private partnership. “They will then begin the task of working with Network Rail to bring together the teams operating the track and trains,” he said.
But how on earth have we ended up stalled in this siding yet again? This is the third time the Government has been forced to intervene on the East Coast line and it has happened because the foundations of the original contract have proven to be false, particularly Stagecoach and Virgin’s projections of passenger growth. Instead, the economic downturn has acted as a drag on passenger numbers and the consortium has been making heavy losses. It also hasn’t helped that planned improvements to the line by Network Rail have been delayed.
The lesson that Labour has drawn from the fiasco is that Britain’s railways should be re-nationalised. But the nationalised service rarely, if ever, received the investment it needed, and public sector companies would not necessarily deliver a better service just because they are publicly owned. Nationalisation is not a panacea.
Instead, the UK Government should acknowledge it is the franchising system that is not fit for purpose. Virgin’s Richard Branson is right to suggest the promised upgrade of the infrastructure could have allowed the company to run more trains. But the real problem is that a franchise model that was supposed to cure the ills of Britain’s railways has instead encouraged companies to overbid, and overpromise, to win contracts.
The result, further down the line, is what we have seen happen to the Stagecoch/Virgin contract, which demonstrates that the system will only work if the companies’ promises are tested more rigorously and they are held to their contracts. Three years ago, Patrick McLoughlin said the new East Coast deal was a good one for passengers and taxpayers – the best deal would be to take this latest opportunity to fix the franchising system for the future.
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