Rail Franchising

Part of NHS Winter Crisis – in the House of Commons at 5:37 pm on 10th January 2018.

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Photo of Maria Eagle Maria Eagle Labour, Garston and Halewood 5:37 pm, 10th January 2018

No other nation in the world runs its railways like the UK has done since the flawed and ideological fragmentation and privatisation carried out by the Major Government in the mid-1990s, and there is a reason for that: it just does not work very well. In particular, it has not worked on the east coast main line. Since rail privatisation, of the three private operators of that franchise, one has gone bust, one has defaulted on the contract and one has been allowed to avoid payments of hundreds of millions of pounds—possible up to £2 billion—that it undertook to pay to the taxpayer.

This latest and grossest private franchising failure is a capitulation by the Transport Secretary to Virgin Trains’ demand to be let off the consequences of its overbidding to get the contract. The Transport Secretary has done this in an effort to prevent the embarrassing spectacle of another very public failure in the private operation of InterCity East Coast. This follows his predecessor’s ideologically motivated decision to strip Directly Operated Railways of the operation of the east coast main line mere weeks ahead of the 2015 general election. In doing this, the Transport Secretary has simply given in to the self-interested and costly demands of the train operating company.

The only east coast operator that has not gone bust, defaulted or received a bail-out from the taxpayer was East Coast Main Line, a wholly-owned subsidiary of Directly Operated Railways—itself a company wholly owned by the Government—which was established by Lord Adonis when he was Transport Secretary in 2009. In other words, it was a publicly owned company. It took over when National Express defaulted, and it ran the line very successfully. Its record is clear and stands in stark contrast to what has happened before and since. It made all its required service payments, returning more than £1 billion to the Treasury. It invested all its profits straight back into services, paying out zero dividends to greedy private owners—because it did not have any—and it achieved some of the best results on the east coast of any operator since records began.