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Are private rail operators taking us for a ride?

Sometimes, it seems ideology just gets in the way of a good idea.  And I’m not talking about the new pro-independence Scottish newspaper. The UK government has returned the East Coast Main Line into private hands five years after the taxpayer resumed control and made it the most successful rail operation in Britain.

The ECML has not only made a profit, it has returned £1 billion to the Treasury since National Express walked away from its contract in 2009, two years after GNER also failed to make it work. Snatching it away from the unglamorously titled Directly Operated Railways now seems like an act of political spitefulness.

Contrary to speculation that the French firm Keolis and Eurostar would secure the franchise, the contract was awarded to a joint bid by Stagecoach and Virgin. The decision to accept a domestic bid may ease some of the fury surrounding the privatisation process

But if the idea of taking the ECML back into state ownership proved a winner, then handing it over to a private sector that has struggled to make money from it looks like a gamble.

Privatising British Rail in 1993 was one of the more controversial of the programme of selling state assets. Some were sensible and successful, often after a period of TLC that put them back on their feet and ready to return to the jungle of the competitive market.

But the rail industry has always required subsidy and will no doubt continue to be supported by the state. To that extent it is a public-private partnership in perpetuity. The issue is to what extent one commands the other, and whether promised investment – which is demanded of the private franchisee – is properly forthcoming.

The irony about privatisation now is that a number of the “private” franchisees are essentially fronts for state-owned operations.

Keolis operates the TransPennine franchise in partnership with FirstGroup and is also a minority partner in the Govia rail operating company, which runs the Southern, Southeastern and London Midland services.

Arriva, which emerged from the company founded by the late Sunderland tycoon Sir Tom Cowie, is now a wholly-owned subsidiary of the German national rail company Deutsche Bahn. It runs trains in Wales and Cross Country franchises.

The Dutch state railway company Nederlandse Spoorwegen -known as NedRail – owns Abellio which recently won the ScotRail franchise, the second highest subsidised franchise among the 16 in the UK.

Abellio has a 50% stake in Serco-Abellio, which runs the Merseyrail and Northern Rail franchises.

Ironically, Tim O’Toole, the American who runs FirstGroup, told me in an interview this year that he was preparing the company for the opening up of the continent’s state rail networks and that they were eager to introduce British techniques into their operations.

That now sounds a little hollow, particularly as FirstGroup will be among the losers in the ECML bid, following similar losses of the ScotRail and West Coast franchises.

Throughout the 20 years since privatisation the new operators have always pledged more investment and improvements in comfort, punctuality and frequency. It has not happened. Rail use has risen 60% since 1993 but there has been only a 3% increase in rolling stock. The result is overcrowding, discomfort and breakdowns.

Foreign rail operators now seem to be tightening their grip, but questions remain about the extent to which the franchise system has been worthwhile.

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