Business Comment

Terry Murden: Needless intervention into rail franchise

East Coast Main LineIt must rank as one of the more out of the blue announcements of last week. Stagecoach and its Virgin partner are just three weeks from taking control of the East Coast Main Line, the biggest rail franchise in the country, only to be told by the competition regulator that it had a few “concerns” about overlapping services.

Stagecoach also runs CityLink coaches between Aberdeen, Dundee and Edinburgh. It also operates train services around Grantham, Lincoln and Peterborough.

The Competition and Markets Authority says these could contribute to putting too much price control in the hands of one company.

Wasn’t any of this made clear during the tendering process? Surely in the box marked “Do you run any other train or bus services in the area?” Stagecoach would have put a big enough tick for everyone to notice.

Aside from that, what’s the problem anyway? Until privatisation all rail services were run by one operator. It was called British Rail and it was part of what could and should have been an integrated public transport network for the UK. Hiving it off to all and sundry has created unnecessary barriers and dislocation to the process. If privatisation was meant to bring prices down – and thereby ease concerns such as those raised by the CMA – then no one told the privately-owned train operators.

Any why does a monopoly over passenger services in the East Midlands cause a problem when clearly there is no such problem for having a monopoly over services in, say, Scotland?

Stagecoach has five days to offer “undertakings” that will address these concerns to avoid a more detailed investigation. Don’t expect to be surprised when it promises to ensure prices remain competitive.

This comes across as little more than pedantic meddling by the CMA. A bigger issue was why the government awarded the franchise to a private operator at all when the ECML was making a profit in public hands.


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