Rail link takeover
Jul 1 2009 by Karen McLauchlan, Evening Gazette
THE Government is to take over the running of the rail link that connects Tees Valley with London and Scotland.
The decision comes after cash-strapped present operator National Express defaulted on its franchise.
Transport Secretary Lord Adonis said he had set up a publicly-owned company which will take over the East Coast line when National Express ceases to operate the franchise - probably later this year.
He said 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 announcement of the takeover came as National Express announced its chief executive Richard Bowker, a former boss of the now-defunct Strategic Rail Authority, was 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.
Today, National Express said it was no longer willing to provide financial support for the franchise.
Lord Adonis said: “I have therefore established a publicly-owned company, which will take over this franchise from the point at which National Express East Coast ceases to operate.
“We will agree an orderly handover with National Express. Until that date, National Express will operate services on the current basis; after that date the new public company will do so.”
He said there would 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,” he added.
National Express could be on course for a legal battle with the Government over its decision to walk away from the East Coast deal. The company has taken “clear and detailed” legal advice and believes the Department for Transport would not have the right to recover losses from the breach of the franchise agreement, or take over its other rail contracts.
