East Coast Mainline: as another franchise hits the rocks, is rail doomed to fail?


Pity the baffled passenger from Edinburgh, Newcastle or Leeds as the train painters get to work on yet another rebrand on the East Coast main line.

After GNER midnight blue, National Express red-white-and-blue, East Coast grey/mauve and Virgin Trains red, who knows what livery the next train on platform 1 may appear in? 

Within minutes of the transport secretary’s announcement that the government will step in once again to rescue a franchise that has hit the buffers, enthusiasts were arguing about whether the rolling stock for the new London North Eastern Railway (LNER) should be in apple green or plum-and-spilt-milk.

The average passenger will not care, so long as the train is on time, affordable and staffed by the same excellent men and women who are losing count of the number of uniform changes they have made in the past dozen years.

Their new employer is legally known as the Operator of Last Resort, which sounds rather alarming: next stop, hell in a hand cart?

But it is simply the Department for Transport (DfT), the same body which awarded Stagecoach and the Virgin empire the franchise that was due to run until 2023.

Virgin Trains East Coast took over the line from Directly Operated Railways (another DfT brand) in March 2015. The then-rail minister, Claire Perry, said at the time that “Virgin and Stagecoach raised the bar” with their joint bid for the franchise. 

Stagecoach and Virgin know perfectly well how to run a railway, because they do it very competently on the West Coast main line. But when franchises are awarded, the prize tends to go to the consortium showing the most optimism – for example, that “remain” would prevail in any EU referendum. 

Last month, the chair of the Transport Select Committee, Labour’s Meg Hillier, said: “The East Coast franchise has failed for a third time because of wildly inaccurate passenger growth forecasts.

“The franchising model is broken and passengers are paying the price.”

Ms Hillier is quite right that franchising isn’t working, and quite wrong about who is footing the bill for this latest failure.

Pity the poor shareholder: for every day that Virgin Trains East Coast has existed, the enterprise has subsidised the taxpayer to the tune of £175,000 – adding up to £200m in three years.

The Stagecoach/Virgin bid was predicated on Network Rail enhancing the infrastructure by eliminating bottlenecks to allow the train operator to run many more services, and on continued steady growth in demand.

Neither has materialised – indeed across the railways, passenger numbers have gone into unexpected decline as the post-referendum economy wobbles. And the taxpayer picks up the pieces.

The reality is that franchises are increasingly becoming outsourcing management contracts, with the government specifying every detail. Whether the private or public sector is better at running them is a worthwhile debate. While re-nationalisation could slice 3 per cent off fares, proponents of privatisation will point to the benefits of competitive tendering on other franchises.

There are more important problems to solve: cutting costs on the railways to match Continental operations, and reforming the commercial anarchy of train fares.

For the passenger, though, nothing changes apart form the livery. Politicians and train operators may come and go, but the Highland Chieftain will depart London King’s Cross tomorrow on the dot of noon for York, Newcastle, Edinburgh and Inverness.

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