Tagged: Lord Davies of Oldham

Former Tory Minister criticises decision to prevent in-house operator from bidding for East Coast Mainline

THE decision to prevent the current public-owned railway company from bidding to run the East Coast line has been criticised by a Conservative former Cabinet minister.

Lord Forsyth of Drumlean said the point of a competitive process was to allow the best company to win.

His comments came after transport minister Baroness Kramer had defended the decision to prevent Directly Operated Railways – which was set up by the Government in July 2009 to run the East Coast franchise – from bidding to continue its operations.

The franchise is due to revert to the private sector in March next year and Lady Kramer said it was a difficult industry for a public company to operate in.

She said:

“It costs something like £7-10mto put in a bid with no assurance of winning. It is certainly a high-risk industry and the margins, even for a successful and profitable company are quite fine.”

 “There are a very different set of skills when you are looking at significant new investment, when you are looking at growth. This is the point we have reached with this franchise.”

But Lord Forsyth told her:

“Surely you would recognise that the whole point of competitive tendering is to get the best value and the best deal for the taxpayer and if you are right that a state owned company wouldn’t be able to compete why is that a reason to exclude it from the process?”

Lady Kramer replied:
“You can see the complexity of a state-owned company being involved in this. Would you give it preferential financing or would it go out into the market?

“Do you want to set a company, pay its senior management very high fees with the possibility of bids of £7-10 million that it might eventually achieve a franchise?

“I have to suggest the history of companies run over the long term by the UK government has not been one of outstanding success.”

Labour peer Baroness Quin said at question time in the House of Lords:

Many of us who use the East Coast rail service regularly are dismayed that the Government has refused to allow the current publicly owned operator, which has greatly improved the service both for the benefit of passengers and UK taxpayers alike to even bid for the franchise and continue running a good service.

“Doesn’t it seem odd that the Government allows foreign state-owned enterprises to run our rail services in part and yet refuses to allow a successful home-grown enterprise to do so?”

Labour transport spokesman Lord Davies of Oldham said:

“Only a Government addicted to dogma would dispense with a company, an organisation which has run the line so successfully and put it out to bidders of which a successful one may be a state-owned company of another country’s railway.”

Source –  Northern Echo,  28 Oct 2014

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