> If it aint broke… break it.
The East Coast Main Line franchise made a profit of £13 million last year – with the cash returned to the Treasury.
And the financial success of the line is in stark contrast to other (privatised) rail franchises, which required millions in subsidies to keep going.
Labour said the figures exposed the foolishness of privatising the line, which is currently run by a state-owned business but is due to be managed by Virgin Trains from March.
They were published in the annual financial report of the Office of Rail Regulation, the official regulator for Britain’s railways.
The East Coast Main Line was one of only two rail franchises to make a profit for taxpayers. The other was South West Trains.
Virgin Trains, which currently runs the West Coast Main Line from London to Manchester and on to Scotland, received £221 million in subsidies.
And the most expensive franchise was the Northern Rail line, which operates in the North East, North West and Yorkshire, and received £495 million.
A separate study by consumer group Which also found the East Coast Main Line had a good record for train delays, coming sixth out of 21 franchises for the lowest number of delays.
Labour’s Shadow Rail Minister Lilian Greenwood MP said:
“These reports prove that the forthcoming East Coast sell-off is set to be a terrible blunder that puts privatisation ahead of passengers’ and taxpayers’ best interests.”
“East Coast was one of only two train operating companies that made a net contribution to the Treasury once infrastructure costs were taken in to account.”
Labour plans to allow a state-owned operator to bid for future franchises, although this would still potentially allow private operators to run franchises if they win the bidding process.
The policy not supported by some Labour MPs who argue that franchises should simply be transferred to the public sector once they expire.
Rail Minister Claire Perry said:
“We are investing record amounts in our railways as part of our long-term economic plan and passenger fares have a crucial role to play in funding these improvements, which will bring more services, more seats and modern trains.
“As we drive forward this huge investment programme, it is absolutely important that disruption to passengers is kept to a minimum. It is also important that we recognise passengers’ concerns about the cost of rail fares. This is why we have frozen them for the second year in a row.”
The Office of Rail Regulation said rail industry income from passengers in 2013/14 was £8.16 billion – a 10.8% rise compared with the figure for 2010/11 and 6.2% higher than in 2012/13.
Government funding for the railways in 2013/14 was just under £3.8 billion – a 16.4% dip on the total for 2010/11 and 8.1% down on 2012/13.
Total Government funding in 2013/14 varied from £1.88 per passenger journey in England to £7.77 per journey in Scotland and £9.18 per journey in Wales.
Government funding in 2013/14 represented 28.5% of the rail industry’s total income.
The number of passenger journeys increased by 16.6% (or by 260 million journeys) between 2010/11 and 2013/14, with the amount of freight carried rising 18.1%.
ORR chief executive Richard Price said:
“There has been substantial growth in the use of the railways in the past four years. Passengers are increasingly the main funder of the railways, and must be central to developing plans for future services and investment.
“Our report also highlights that the rail industry has been successful in keeping costs stable despite carrying significantly more passengers.”
Source – Newcastle Journal, 16 Feb 2015
> Bit of a suprise… everyone seemed to expect the French bid to win.
Virgin Trains and Stagecoach have won the franchise to run the East Coast mainline rail route, it emerged this morning.
The controversial takeover has seen the firms promise to invest £140m in the route over eight years, and will pay the government £3.3bn for the contract.
Rail Minister Claire Perry is expected to be at Newcastle Central Station today and the franchise, which covers the route between London and Edinburgh, has been publicly run since 2009.
The anticipated move was lambasted by Labour MPs in the North East, after the publicly-run Directed Operated Railways brought the line back into profit.
Ahead of this morning’s decision, Dave Anderson, Blaydon’s Labour MP, said:
“This shows the real contempt that this coalition feels for the people of the North.
“We have seen continuing failures by private companies in running our line over the period since privatisation until the public sector stepped back in and stopped the rot and we have seen increased punctuality accompanied by increased usage by the travelling public which has delivered the best economic performance of any UK train service.
“This counts for nothing in the world of Conservative dogma. It shows, yet again, that this Government will ignore the wishes of anyone as it steams ahead with its ideological attack on the public sector in our country.”
East Coast paid a record £235m back to the Government in its final full year in public hands – up 12% on the previous year. Proof, unions believe, that a private sector deal is politically-motivated.
Grahame Morris, Easington MP, dismissed the privatisation of the line this week as “right wing Tory dogma”.
He said: “This public-run rail franchise has generated over a billion pounds for the Treasury.
“If this is what a publicly-run train operating franchise can deliver, at a time when every penny counts, we should be looking at ways to bring privately run railways back into public ownership not the other way round.
“This is right wing Tory dogma being put ahead of the best interests of the service, consideration for passengers and the public finances.
“The public-run East Coast Main Line franchise has consistently been the best performing franchise when it comes to passenger and staff satisfaction, fares and profitability.”
Source – Newcastle Evening Chronicle, 27 Nov 2014
Easington Labour MP Grahame Morris and transport unions have reacted with fury to reports that the UK’s only Government-run rail line is to be taken over by a consortium largely owned by the French state.
Mr Morris said the decision to re-privatise the East Coast line was “right-wing Tory dogma being put ahead of the best interests of passengers”.
Edinburgh East Labour MP Sheila Gilmour and the RMT and TSSA unions were also highly critical of the expected decision.
The UK Government has been anxious to return the London to Scotland East Coast main line to the private sector ever since it was taken over from National Express by the Department for Transport in 2009.
But now it is likely that this week’s announcement of a new private franchise will see the line, from next year, being run by joint bidders Eurostar and French transport company Keolis which is 70% owned by state-run French rail company SNCF.
Opponents of the move to re-privatise the East Coast line have pointed out that the public-sector run company has made big returns to the Treasury during its tenure.
Mr Morris said:
“This public-run rail franchise has generated over a billion pounds for the Treasury. If this is what a publicly-run train operating franchise can deliver, at a time when every penny counts, we should be looking at ways to bring privately run railways back into public ownership not the other way round.
“This is right wing Tory dogma being put ahead of the best interests of the service, consideration for passengers and the public finances. The public-run East Coast main line franchise has consistently been the best performing franchise when it comes to passenger and staff satisfaction, fares and profitability. “
Ms Gilmore said:
“Passengers recognise the improvements to services that East Coast have made under public ownership over the last few years. They also appreciate that at present, all profits are retained for the benefit of British passengers and taxpayers.
“But despite calls from Labour for these arrangements to continue in the long term, today we hear that East Coast is set to be privatised just before the next general election.”
She went on:
“Ironically if the contract is awarded to Keolis – which is largely owned by the French government – ticket revenue may well be reinvested in improved services. Unfortunately these will be services between places like Paris and Lyon or Marseille and Monaco, rather than Edinburgh and London.
“A future Labour government would allow a public sector operator to bid for rail contracts, so that passengers and taxpayers always get value for money.”
A win for Eurostar/Keolis would mean disappointment for the other two bidders – FirstGroup and a joint venture between Virgin Trains and transport company Stagecoach.
Before National Express pulled out of the franchise, a previous private operator – GNER – also ceased running the East Coast line after its parent company Sea Containers got into financial difficulties.
Mick Cash, general secretary of the RMT transport union said re-privatising the line was “ludicrous” and a “national disgrace”.
“This is pure industrial vandalism and the strong rumour that the French-state operator is in pole position to mop up this vital, strategic north/south route says it all.
“This Government is happy to have state ownership of our railways as long as it isn’t by the British state, in the interests of the British people.”
Manuel Cortes, leader of the TSSA transport union, said:
“This has got nothing to do with improving services but everything to do with sheer political spite.
“Here we have the best-value franchise, which has returned £1 billion to the taxpayer over the past five years, being sold overseas because it is a public sector success story.
“Rather than allow that to continue, the Tories would rather see it in French hands. They don’t want the voters having the chance to keep it in the public sector by voting Labour in May.”
He went on:
“We are in the absurd position that the country that invented railways, and gave them to the world, is no longer considered by the Tories capable enough to run our own railway firms.
“They prefer French, German and Dutch state railways to run them instead. ‘Anyone but the Brits’ seems to be their vindictive attitude.”
Source – Newcastle Evening Chronicle, 25 Nov 2014
The next East Coast trains operator must be stopped from cutting Northumberland rail services, county council bosses have said.
Northumberland County Council has joined a growing number of groups to express concern that the new East Coast franchise could see operators allowed to axe stopping services in the county.
In the council’s formal response to the rail consultation, Northumberland councillor Ian Swithenbank warns of service cuts to and from London which would hit the county if a new big-money operator is not forced to match current standards.
He points out that the new franchise would let operators choose to drop the early morning service from Berwick, Alnmouth and Morpeth, which then calls at Newcastle and straight on to London, bringing a business market to the capital.
The return journey faces similar peril. Mr Swithenbank said the consultation document had: “no mention of any requirement to maintain the existing Friday-only 7.30pm from Kings Cross calling, among other stations, at Morpeth, Alnmouth and Berwick, thus removing an important link from London for weekend visitors and county residents returning late on Friday from the capital.”
There is also no mention of any requirement to provide an evening Monday-Friday departure to Morpeth significantly later than 4pm.
Further service cuts could come on Sunday services to capital. The Government has no requirement for a direct train from Morpeth to London and the number of trains from London to Morpeth is reduced from five to four, a 20% reduction in provision in train service to the county town, which the council says will reduce journey opportunities both for visitors to the county and residents returning from the South.
Backing the council is Berwick Labour candidate Scott Dickinson. He said: “I welcome the intervention of councillor Swithenbank on this vitally important issue for North Northumberland in particular.
“The reprivatisation of East Coast and the decisions taken on the tender specification by the coalition government effectively relegate this important transport link for Northumberland. This will seriously damage our economic prospects.
“The minister needs to answer the questions. My real worry is that the decision to re-privatise East Coast after two private sector failures will end up costing the tax payer more and will lead to a second class service in Northumberland.”
The Department for Transport is set to decide on who should take over the state owned railway this autumn. Bidders include west coast operator Virgin Trains with Stagecoach and a joint bid from Eurostar and French state-backed firm Keolis.
Labour has called for the profitable route to remain in public hands.
Source – Newcastle Journal, 24 June 2014