National Express franchise handover01 Jul 2009

Commenting on the news that National Express has handed back its East Coast rail franchise, transport economist and director of the RAC Foundation, Professor Stephen Glaister, said:

“Whilst travellers might not see any difference when the franchise transfers to public ownership, this is a disaster for the tax-payer and just one more burden on an already cash-strapped department. The only reason National Express is handing back the service is because it is not financially viable, which does not bode well for ministers who will now have to move money from other vital projects.”

“The whole sorry episode shows how flawed the rail franchise bidding system has been. It created a win-win situation for private sector companies. Bumper profits in the good times and the expectation they could walk away from their commitments in the bad times.”

“And this is unlikely to be the end of the story. There will undoubtedly be more calls on the tax-payer from other rail franchises.”

“Where does this leave transport spending in general? Earlier this week Lord Mandelson explicitly said some of the DfT budget would be moved to other ‘more needy’ departments, and now this. The chances of suitable funding being available in the medium-term for any meaningful road projects – or indeed new rail services – must now be extremely slim.”