French-state rail set for East Coast
THE Department for Transport is set to announce the privatisation of the East Coast Mainline this week, with a joint bid from Eurostar and Keolis understood to be the frontrunner.
The controversial tender will see the route, which connects London to Scotland, return to private ownership after five years in the hands of the public sector.
Eurostar and Keolis are competing against First Group and a joint bid from Virgin/Stagecoach to take control of the line from next year. However, sources close to the process believe First Group and Virgin’s efforts will fall short.
The East Coast Mainline has been in the hands of Directly Operated Railways (DOR), a subsidiary of the DfT, since 2009. It seized control of the franchise when its previous operator National Express ran into financial difficulties.
The Government is happy to have state control of our main inter-city routes, as long as it’s not the British state
It is estimated that DOR has returned over £1 billion to the taxpayer while in control of the line and last year alone it generated £235 million for the Exchequer. The move to privatise it has been condemned as a “national disgrace” by the RMT union.
RMT general Secretary Mick Cash said: “It is a national disgrace that the Government is continuing with plans to bulldoze through the reprivatisation despite figures showing it is handing massive sums back to the British people.”
Cash also slammed the Coalition for allowing companies backed by foreign governments to enter the bidding process while disqualifying DOR from the process.
Eurostar and Keolis are both majority-owned by the French state rail operator SNCF.
“The Government is happy to have state control of our main inter-city routes, as long as it’s not the British state.
“It is simply ludicrous to even contemplate reprivatisation when not only have there been two previous private sector failures on the East Coast route, but when the public-sector rescue operation has been such a stunning success,” Cash added.
Alistair Gordon, chief executive of Keolis UK, said last year that the tender represents an opportunity to “transform a hugely important national route, which has yet to see the same levels of investment as the West Coast Mainline”.
Labour has said if it wins the next election, state-run operators could be permitted to challenge private firms for rail contracts.
Ed Miliband has even suggested that Labour could renationalise Britain’s railways if it wins power. In May, Miliband said that he is “looking at all the options”.
The DfT claims that private sector involvement on the East Coast Mainline will provide “certainty of ownership”, paving the way for “significant investment”. A DfT spokesman declined to provide further comment.
Eurostar last year paid £18.6 million in dividends to its British, French and Belgian state owners and carried over 10 million passengers for the first time.
