Railways: East Coast Rail Franchise

Lord Davies of Oldham Excerpts

Tuesday 28th October 2014 Lords Chamber

[Baroness Kramer]

My Lords, I cannot comment directly on an issue that will obviously be under consideration but I will take back my noble friend’s comments with pleasure.

[Lord Davies of Oldham (Lab)]

My Lords, the Minister may have sought to reassure the House that she had some form of consultation with the trade unions but did she have any consultation with the half a million additional passengers that are being carried on the line under the successful operation of DOR? Surely she will accept that only a Government who are addicted to dogma would dispense with a company—an organisation that has run the line so successfully—and put it out to bidders, of which the successful one may well be the state-owned company of another country’s railway.

[Baroness Kramer]

My Lords, it is certainly true that other countries have chosen to invest and own companies across a wide range of industries. This is a particularly difficult industry in which to do that. Its fixed costs are extremely high. It costs something like £7 million to £10 million to put in a bid, with no assurance of winning. It is certainly a high-risk industry and the margins, as the noble Lord will know, even for an effective and profitable company, are quite fine. It is an entirely valid decision not to enter into actually running companies when there are private options that have delivered very successfully up and down the country.