Britain’s East Coast rail service, which runs from London to Aberdeen, is being taken into temporary state control on June 24, after it became clear that the companies that held the franchise, Virgin and Stagecoach, could not meet the payments due under the £3.3bn contract which they signed up to just over 3 years ago, writes Susan Moore.
The recent announcement in followed an earlier statement by Tory Transport Secretary Chris Grayling, that the franchise would end three years early in 2020, allowing the operators to avoid up to £2bn in payments until 2023. But despite this debacle, the Tory government has said this will have no impact on those companies’ ability to continue bidding for other franchises.
This is the third time in a decade this line has been nationalised as franchise bids were proved to have been based on lies and myths. Between 2009 and 2015, the line was run by a government owned business, Directly Operated Railways, taking over from private operator National Express. During this period, DOR returned significant sums of money to the public purse. For example in 2013-14, they made a made a pre-tax operating profit of £225.3million in 2013-14 and returned £216.8million in premium and dividend payments to the Department of Transport. This is the context in which the Tories’ announcement that this franchise would only be in public hands temporarily is such a sham.
Labour’s Shadow transport secretary, Andy McDonald, said the government of had “cynically reprivatised” the line on the eve of the 2015 election, adding: “We’ve had bailout after bailout … Rail companies win, passengers and taxpayers lose. Franchising remains at the heart of the alleged partnerships. No amount of tinkering can solve the failings of a broken privatised system where the public takes the risk and the companies take the profit.”
Rail unions urged Grayling to keep the line in state hands. The RMT’s general secretary, Mick Cash, said: “This is the second time that the government have called upon the public sector to launch a rescue operation on the east coast and instead of being a temporary arrangement Chris Grayling should listen to his staff and the public and make it permanent.”
The chair of the transport select committee, Lilian Greenwood, asked Grayling in the Commons: “What does this decision today mean for other franchises which we know are struggling to meet their obligations?” When the Tory MP replied that there was no other franchise in the same position, very few people can have confidence in his words.
Industry analysts widely believe that First Group overbid for TransPennine Express, running between Manchester airport and the north east of England and the east coast of Scotland as well as Abellio for Greater Anglia, running between London and East Anglia. A sharp drop in passenger numbers has also left First potentially exposed to losses on its South Western franchise, between London and the South West of England. Labour has also questioned the future of Arriva’s Northern Rail franchise, whose service which has been attacked by Manchester’s Labour mayor Andy Burnham.
The whole rail industry is in a mess in Britain, with companies attacking workers conditions and ignoring the needs of disabled passengers with impaired mobility by trying to get rid of guards on many lines. Rising fares and late and cancelled services do nothing to help Britain cut carbon emissions as road usage grows further. And the jumble of franchises makes planning complex journeys organizationally difficult as well as ridiculously complex.
This is why Labour under Jeremy Corbyn have committed to renationalization of the railways. This is an extremely popular policy, supported by almost two thirds of the public. Shadow Chancellor John McDonnell says that the plan is that when each of the 25 existing franchises runs out they will be taken back into public hands, and then reverse the split between track and rail brought in by privatisation.