The Transport Secretary Patrick McLoughlin recently announced that a new franchise for the East Coast Main Line, (that’s the classic route of the Flying Scotsman from London to Edinburgh) would be awarded from 2016. The bidding race for this prestigious franchise has begun. What the Government is looking for is a franchisee that will invest in services, provide ‘innovative timetabling’ (whatever that means) and pay a load of dosh back to the Treasury (which most franschises to date haven’t).
The current franchisee has operated the route for four years. It has increased the frequency of services, introduced direct services between Lincoln and London, runs between Harrogate and London seven days a week, it has invested significantly and it expects to return a billion pounds to the Treasury over the first five years of the franchise. With such a track record (no pun intended) of success you might think that the franchisee would be a strong favourite to be awarded the new franchise. You would be wrong because it is not being allowed to bid. The reason for this is that the franchisee is the publicly owned Directly Operated Railways who stepped in in 2009 after the withdrawal of both GNER and National Express. Where the private sector failed they have succeeded and not for the first time. They ran South East Trains successfully after the abysmal failures of Connex. They are, therefore, an embarrassment to politicians trapped in the dogma that the private sector is always better than the public. And private sector operators hate them. Stagecoach have issued a rather intemperate statement saying that a competitive bidding process will generate much better returns than simply handing a franchise to a public sector operator. Maybe but that is no reason why a successful incumbent should not be allowed to bid and, besides, previous competitions did not realise great benefits for the public purse as wildly optimistic private sector bids led to operators pulling out of contractual obligations when they found they couldn’t afford them. These episodes raise a significant question about the whole concept of franchising and certainly about the folly of not allowing BR to remain in existence as a train operator at privatisation. .
Coming from Stagecoach, a specialist in monopolistic and anti-competitive practices and whose owners have amassed huge wealth from milking the taxpayer, talk of free markets and competition is frankly a bit rich (again no pun intended). They are but one example of the parasite capitalism that I will return to in a future post. It is the almost theological belief in the private sector that has helped this situation to come about. As we can see with the East Coast franchise ideology continues to hold sway over boring old facts.