Nationalised Express

July 01, 2009 1:38 PM

For regular passengers on the East Coast main line, the news that National Express has failed in its running of the line so badly that the Government has decided to seize control of it will come as no surprise. For the taxpayers who are now faced with yet more railway costs, though, the move is a worrying one.


As a Geordie, I have the misfortune of having to travel National Express whenever I want to return home by train. While GNER weren't perfect, their staff and service were a paragon of delight by comparison to NE's grumpy, understocked and mismanaged services. When, recently, I complained to an on-train service manager about the failure to put any food on the train before it started its journey from King's Cross, I got halfway through my sentence before he finished it for me:


Me: "It's ridiculous that we pay through the nose for a ticket and then you fail to provide a decent service in return. Ever..."


Train Manager: "-Ever since National Express took over it's been rubbish? Tell me about it."


It was at that point that it became clear that NE were probably doomed. If even their own customer service staff were sick of them, they had a serious problem.


NE seemed to assume that because they had a near monopoly on the line, they could treat passengers like cattle and they would continue to pay up. Not so - people are resourceful, and while NE had a near monopoly on that line, there was plenty of scope for people to drive, fly or even travel more circuitous routes by rail to avoid their dreadful service.


So where does this leave taxpayers?


If NE weren't meeting the terms of the contract, then they deserved to lose the contract. The terms on which they have lost it remain to be seen.


Lord Adonis, the Transport Secretary, was very insistent on the radio this morning that there would be no taxpayers' money given to National Express to bail them out, but they may end up getting taxpayers' cash anyway. Consider the bizarre and tangled web of the rail franchise system:


- The Government franchises out 19 rail services to rail companies. It sells these franchises and uses the money to part-fund Network Rail's work on the rail system.


- Those companies then have to pay fees to Network Rail for use of the tracks.


- The Government gives the companies taxpayers' money to cover the cost of the Network Rail fees.


- The rail companies on several larger lines have to pay levies back to the Government because their rail services are meant to be profitable.


- If those lines aren't profitable, though, in some cases the Government has "revenue support agreements" which mean taxpayers' money is paid to unexpectedly loss-making companies to help them make their levy payments.


So there are already a multiplicity of ways in which taxpayers' cash is flowing in vast quantities into the railways, often simply to fund companies to pay money to, erm, the taxpayer. The prospect of one of the rail franchise holders dropping out raises several questions:


1) Will National Express have to pay compensation to the Government for breach of contract?


2) Were NE already being subsidised to make their Network Rail and Government payments?


3) When the Government take control of the East Coast main line will they have to buy or rent the trains and coaches from National Express?


4) How soon will the franchise be put up for sale again?


The Government must drive a hard bargain here - National Express have let taxpayers and passengers down severely and should pay the price. The transfer of rolling stock should surely be part of the conditions for breach of contract on a rail service that needs to be kept running. The franchise should be put up for sale immediately, so a bidding process can begin while NE's control is being wound down. Returning this service to a better private company as soon as possible and minimising the cost to the taxpayer must be a priority.


This is a mess - we need some strong decisions from Lord Adonis pretty soon, or yet again the taxpayer will be left trying to shovel money into a potentially bottomless pit.

For regular passengers on the East Coast main line, the news that National Express has failed in its running of the line so badly that the Government has decided to seize control of it will come as no surprise. For the taxpayers who are now faced with yet more railway costs, though, the move is a worrying one.


As a Geordie, I have the misfortune of having to travel National Express whenever I want to return home by train. While GNER weren't perfect, their staff and service were a paragon of delight by comparison to NE's grumpy, understocked and mismanaged services. When, recently, I complained to an on-train service manager about the failure to put any food on the train before it started its journey from King's Cross, I got halfway through my sentence before he finished it for me:


Me: "It's ridiculous that we pay through the nose for a ticket and then you fail to provide a decent service in return. Ever..."


Train Manager: "-Ever since National Express took over it's been rubbish? Tell me about it."


It was at that point that it became clear that NE were probably doomed. If even their own customer service staff were sick of them, they had a serious problem.


NE seemed to assume that because they had a near monopoly on the line, they could treat passengers like cattle and they would continue to pay up. Not so - people are resourceful, and while NE had a near monopoly on that line, there was plenty of scope for people to drive, fly or even travel more circuitous routes by rail to avoid their dreadful service.


So where does this leave taxpayers?


If NE weren't meeting the terms of the contract, then they deserved to lose the contract. The terms on which they have lost it remain to be seen.


Lord Adonis, the Transport Secretary, was very insistent on the radio this morning that there would be no taxpayers' money given to National Express to bail them out, but they may end up getting taxpayers' cash anyway. Consider the bizarre and tangled web of the rail franchise system:


- The Government franchises out 19 rail services to rail companies. It sells these franchises and uses the money to part-fund Network Rail's work on the rail system.


- Those companies then have to pay fees to Network Rail for use of the tracks.


- The Government gives the companies taxpayers' money to cover the cost of the Network Rail fees.


- The rail companies on several larger lines have to pay levies back to the Government because their rail services are meant to be profitable.


- If those lines aren't profitable, though, in some cases the Government has "revenue support agreements" which mean taxpayers' money is paid to unexpectedly loss-making companies to help them make their levy payments.


So there are already a multiplicity of ways in which taxpayers' cash is flowing in vast quantities into the railways, often simply to fund companies to pay money to, erm, the taxpayer. The prospect of one of the rail franchise holders dropping out raises several questions:


1) Will National Express have to pay compensation to the Government for breach of contract?


2) Were NE already being subsidised to make their Network Rail and Government payments?


3) When the Government take control of the East Coast main line will they have to buy or rent the trains and coaches from National Express?


4) How soon will the franchise be put up for sale again?


The Government must drive a hard bargain here - National Express have let taxpayers and passengers down severely and should pay the price. The transfer of rolling stock should surely be part of the conditions for breach of contract on a rail service that needs to be kept running. The franchise should be put up for sale immediately, so a bidding process can begin while NE's control is being wound down. Returning this service to a better private company as soon as possible and minimising the cost to the taxpayer must be a priority.


This is a mess - we need some strong decisions from Lord Adonis pretty soon, or yet again the taxpayer will be left trying to shovel money into a potentially bottomless pit.

Latest Blogs: