'Special Vehicle' may let National Express of the hook

BOSSES at National Express are confident they can walk away from the East Coast Main Line at little cost to the company.

The transport company insists the responsibility to meet Government franchise repayments lies with National Express East Coast.

Known as NXEC, this is a special purpose vehicle which the Government itself asked be set up as a standalone legal entity with its own assets, management team and franchise agreement.

As a result parent company National Express in theory only has its reputation to worry about. National Express loaned NXEC around £72m. Once this has been used up, it will amount to the total losses for the transport company.

In essence National Express can pass all the blame onto NXEC, even though it would take all the success if things were going better.

The risk is carried by the special purpose vehicle, but the profits are taken by the parent company, a system critics have warned makes it too easy for company’s to abandon vital rail routes.

National Express’s legal advice is that the Government can shout all it likes about snatching the more profitable lines back off National Express, but legally its East Anglia and c2c routes appear quite safe.

The Government may yet disagree. Lord Adonis said yesterday that he was considering "grounds to terminate these franchises, and we are exploring all options in the light of the group’s statement this morning."

He continued: "It would clearly be reasonable not to invite a company to bid for future franchises in circumstances where it has recently failed to deliver on a previous franchise.

"A company which has defaulted, in the way National Express now intends, would not have been qualified for any previous franchises let by the department."