Government to run East Coast Mainline

Jul 1 2009 By nebusiness

THE Government is to take over the running of the East Coast Main Line after cash-strapped operator National Express defaulted on its franchise.

Transport Secretary Lord Adonis said he has set up a publicly-owned company which will take over the line when National Express ceases to operate the franchise - probably later this year.

Lord Adonis added that the Government may have grounds to terminate National Express’s other rail franchises - East Anglia and the London to Tilbury and Southern franchise c2c.

The takeover move came as National Express announced its chief executive Richard Bowker, a former boss of the now-defunct Strategic Rail Authority, is leaving to take up a Middle East rail job.

The problem with the East Coast franchise was that National Express had to pay back to the Government a total of £1.4bn in premiums over the life of the franchise.

But passenger growth has stalled in the recession and the company has failed to renegotiate the franchise with the Department for Transport.

Now National Express has said it is no longer willing to provide financial support for the franchise.

Lord Adonis said: “There will be no interruption of services. Existing operational staff - who continue to provide a good service - will transfer to the new East Coast Main Line company; so will the assets necessary for the continuation of the service.

“I can assure the travelling public that services will continue without disruption and all tickets will be honoured.”

He said it was the Government’s intention to tender for a new East Coast franchise operator from the end of 2010.

He added: “The specification of the new franchise will reflect my concern to secure better passenger services and facilities.”

But Ray O'Toole, who was named as the new National Express chief operating officer, insisted the company could continue running the line if the wider economy recovered sufficiently this year.

Agreeing that Lord Adonis appeared to have jumped the gun, he said it was not true that it had walked away and that the franchise had been taken back into public hands.

He said: “That is not correct. The situation is is that we have been in discussions with the Department for Transport since the beginning this year with a view to considering what the effects of the economic downturn has done, which is affecting all the railways.

“Unfortunately we have not got a position where we have been able to agree things and, as of today, we have notified the Department for Transport that, if the existing economic conditions continue, then during some part of 2009, the second half, there may be a requirement to hand over the franchise is an orderly manner.”

Asked if it was possible the company could still be running the line next year, he said: “Yes. if the economic downturn does start to recover in the second half of the year and we see things a lot better... we will continue to run it.”

The NECC said the Government had a duty to provide rail passengers with continued high levels of service, punctuality and competitive prices on line.

NECC chief executive James Ramsbotham said: “The East Coast Main Line is a vital link to London and Edinburgh for North East business passengers. It is essential that it remains punctual with excellent service and at the most affordable price.

“Lord Adonis has given a commitment that the service itself will run as normal and this is paramount as the competitiveness of the North East is greatly enhanced by the quality and accessibility of the East Coast Main Line.”