Private companies have been invited to bid for the East Coast rail franchise

Rail franchise process resumes amid delays

The government signalled the restart of the rail franchise process today – with no cancellations but many delays.

The process was derailed over the West Coast franchise fiasco when the awarded contract had to be scrapped due to Department for Transport (DfT) errors.

Virgin Trains had lost out to rival transport company FirstGroup for a new West Coast franchise.

Following the abandonment, Virgin and the DfT reached a deal to run the franchise until November 2014.

However, under a new franchise timetable announced by Transport Secretary Patrick McLoughlin, a new West Coast franchise will not start until April 2017, with Virgin negotiating with the DfT over continuing until then.

There are also delays to the start-up dates of a number of other franchises. South Eastern, for example, has been put back from April 2014 to June 2018.

McLoughlin also announced today that he was opening the bidding to private companies for a new franchise for the East Coast main line.

This key London-to-Scotland route has been run under the control of the DfT since November 2009 after transport company National Express pulled out. McLoughlin said the new franchise was expected to begin in February 2015.

The West Coast debacle led to two independent reviews – one on the West Coast fiasco and the other on the whole franchise process.

The announcement is the direct result of the reviews.

The new franchise timetable shows that, for example, the Great Western franchise, run by FirstGroup and due to end in October this year, will not start until July 2016, while the Northern franchise, due to end in April 2014, will not begin until February 2016.

The first of the new franchises to start will be Essex Thameside, where the franchise ends in May this year and will begin in September 2014.

As in the case of Virgin, current operators will negotiate with the DfT about carrying on during their franchise "overtime".

McLoughlin said: "This programme is a major step in delivering tangible improvements to services, providing long-term certainty to the market and supporting our huge programme of rail investment.

"Above all, in future franchise competitions we are placing passengers in the driving seat by ensuring that their views and satisfaction levels are taken into account when deciding which companies run our railway services.

"Franchising has been a force for good in the story of Britain's railways, transforming an industry that was in decline into one that today carries record numbers of passengers."

Rail unions reacted with dismay to the East Coast news, pointing out that the private sector had twice given up the franchise, with GNER pulling out some years ago.

They also highlighted the fact that the taxpayer is likely to have to foot a bill as high as £50m over the botched West Coast franchise.

RMT general secretary Bob Crow said: "Despite wasting hundreds of millions of pounds of taxpayers' money on the franchising circus, and instead of learning the lessons of the privatisation disasters on the East and West Coast main lines and across the rest of the network, the government has this morning given the green light to a whole new wave of profiteering that will have the train companies laughing all the way to the bank.

"The proposed reprivatisation of the East Coast, after the public sector rescued the service following two private failures, proves conclusively that the political class have learnt absolutely nothing when it comes to our railways.

"This is a politically-inspired wrecking move designed to flog off this publicly-owned intercity route before the next election regardless of the consequences."

He went on: "With this news coming just a day before the 50th anniversary of the Beeching Report that ripped Britain's railways to pieces, the ConDem administration is setting up yet another sell-off of state assets in a further act of grotesque rail vandalism.

"The public need to know that, while fares are going up and safety is being compromised, the government's priority remains the profits of the greedy train operating companies. No wonder 70 per cent of the people now support RMT's call for full renationalisation."

Manuel Cortes, leader of the TSSA rail union, said: "The Tories are just like the Bourbons when it comes to rail – they ignore all the lessons of history.

"The £50m West Coast line fiasco revealed that private franchises are a shambles. So they go and privatise the only successful publicly-owned franchise, the East Coast line.

"This is an act of political spite to reward their friends in the City and to tie the hands of an incoming Labour government in 2015. The most expensive rail network in Europe is about to get even more expensive."

Passenger Focus chief executive Anthony Smith said: "It is crucial that passenger needs and expectations are at the heart of what government buys on their behalf.

"Today's announcement is an important first step towards delivering stability for passengers, and much-needed and delayed investment."

Shadow transport secretary Maria Eagle said: "With the government's rail franchising programme in chaos, it is a bizarre and dogmatic decision to prioritise the privatisation of a service that is actually on track.

"Since running services on a not-for-private-profit basis, the East Coast operator has returned £640m to the taxpayer and invested more than £40m in improvements to the service, achieving some of the best results for passengers since records began.

"It's clear that the government has learnt nothing from the franchising fiasco that could eventually see more than £100m of taxpayers' money go down the drain as a result of ministerial incompetence."

Richard Brown, who headed the independent inquiry into franchises and who is chairman of the newly formed Franchise Advisory Panel, said: "I am pleased to see that government has engaged with my recommendations.

"It is clear to me that this announcement represents an opportunity for government to seek competitive and innovative proposals from the existing train operating companies and potential new market entrants to demonstrate how they will continue to improve services for passengers.

"The clarity around the franchise programme will also allow fresh energy to be brought to the urgent task of developing closer partnerships with Network Rail to drive out costs from the industry and provide a better deal for passengers and taxpayers."

Graham Smith, director-general of the Rail Delivery Group, said: "Britain's railways have enjoyed significant growth and investment – restoring passenger, taxpayer and investor confidence in the franchising process will allow this growth to continue.

"A restart of the franchising programme, a transparent procurement process and clarity on what government wishes the passenger railway to provide will all help re-establish confidence and enable franchisees to deliver improved services for passengers.

"Rail Delivery Group members will continue to work collaboratively with government to deliver the new programme, including franchise extensions where these are required, to get the best deal for passengers."

Sir David Higgins, chief executive of Network Rail, said: "Our goal is to work with the rest of the industry to provide a safer and more efficient railway which addresses the underlying issues of capacity and performance. The clarity provided in today's statement is welcome in helping us achieve that."

A DfT spokesman said: "A key recommendation of the independent Brown Review into rail franchising was that the government should run no more than three to four competitions a year to avoid saturating the market.

"This ensures that the Department and the market are sufficiently resourced to deliver the best value for money for both passengers and taxpayers."

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