Railways: East Coast Rail Franchise

Lord Bradshaw Excerpts

Tuesday 28th October 2014 Lords Chamber

[Baroness Kramer]

My Lords, noble Lords will be aware that Directly Operated Railways that took over the running of the east coast service after the failure of the previous franchise was always anticipated to be temporary; I am sure that the noble Lord, Lord Adonis, will confirm that. It has done an excellent job; I would not wish to understate that. It is important that the Government have the capacity to step in when something happens within a franchise that makes that necessary. Now, however, we need very significant new investment; there needs to be a long-term partner taking this franchise forward, so it is right to go into the franchising process. I would be glad to address questions on whether we should have our own franchising entity, but I do not want to take too long on a single answer.

[Lord Bradshaw (LD)]

My Lords, will the Minister think about the fact that this franchise has failed twice and that the present competition is very uncertain because of the threat of open access operation to whomever the franchise is let? If any of the franchise bidders bid less than what the taxpayer gets from Directly Operated Railways, will the Government allow the latter organisation to continue to run the railway?

[Baroness Kramer]

My Lords, the franchise process is in train. The award will come in February, so I obviously cannot comment on the competitors’ offers at this time. That would be entirely improper. It is certainly true that DOR returned profits to the Government—not to the department. It is also important to understand that it has not had the demands that are placed on many franchises in the level of investment required. We will have new equipment coming on to the line and new rolling stock, too. That will mean significant new burdens and we have many greater requirements now in terms of customer service so there is a need for significant investment. That is why a new player needs to come in at this time. It is obviously open to any Government to own companies and use them in various ways. This country used to have an airports industry and ran steel mills and car companies. However, we have found that the franchising system has offered us excellence. Train-operating companies have delivered very good service at very good prices. We have seen the response to that from passengers who have doubled in number in the past 20 years.