The Sleeper's Blog

18.09.18

The East Coast franchise report tells us what we already knew: it was a bid set up to fail

RTM's Jack Donnelly assesses what the Transport Committee's latest report on the VTEC franchise means for the industry as a whole

“Even now, there is no concrete plan, nor timescales, for the interim operator of this franchise. From our inquiry, we cannot be sure, and cannot reassure passengers or public, that the arrangements for the East Coast Partnership will more successfully overcome the systemic difficulties presented by the current set-up.”

This was the view of Transport Select Committee chair Lilian Greenwood last week during the announcement of MPs’ scathing review of the debacle that was the Virgin Trains East Coast (VTEC) franchise.

Following news in June that the InterCity East Coast (ICEC) franchise would once again be back in public hands, MPs set out to decipher the causes behind the collapse in the joint venture between Stagecoach and Virgin, placing prime responsibility at the feet of the two transport giants.

Yet it was not just Virgin and Stagecoach’s failures that led to the implosion of the contract for the iconic London to Edinburgh route: the DfT also issued “overoptimistic” revenue targets for the bidders, MPs found. A crassly-hopeful cash target set by government, coupled with underwhelming misfires in passenger numbers on the East Coast Main Line, created a deadly concoction that no transport titan could recover from.

The consequences of the revenue shortfalls were evident: VTEC had to forego the £165m parent company guarantee committed to the DfT when the deal was signed— and, by the end of January this year, the last parent company support was drawn down and the franchise went into “technical default.”

The most infuriating aspect of the failed franchise? This is the third time a bid has been agreed to run the franchise in just over a decade, and the third time it has ended in tears. In 2007, the Great North Eastern Railway flopped after its parent company had financial difficulties. In 2009, the once-hopeful National Express East Coast, facing mounting financial pressures due to the economic downturn, ran out of cash after registering a 1% decrease in ticket sales and was forced to hand the franchise back into government hands.

So what is it that MPs have told future-bidding TOCs and the government this time to prevent heartache when the ICEC franchise is back up for tender? The report said: “If the DfT had conducted appropriate due diligence and identified weaknesses in the assumptions underpinning the bid, it may not have been in this position today.”

Over half of respondents in RTM’s newest poll outlined their lack of enthusiasm for the DfT’s management of the franchise, too: 57% of respondents said they do not feel the East Coast Partnership will be enough to salvage the franchise, whilst a third feel the partnership has potential, but a reform to the current system is needed.

Those who call for a revamped franchise system may just get their wish: with the government playing with the idea of a review of franchising in the future – perhaps even as early as this week – we could have a completely new model running the franchise altogether. Clearly, the poison chalice that is the ICEC franchise requires greater checks and balances, and a hefty cash sum behind it to stand more of a chance in providing passengers a reliable, comfortable, and, most importantly, a valuable service for rail users.

Comments

There are no comments. Why not be the first?

Add your comment

 

rail technology magazine tv

more videos >

latest rail news

North of England leaders demand ‘Northern Budget’ to boost region

16/08/2019North of England leaders demand ‘Northern Budget’ to boost region

Key leaders from across the North of England have called for Government commitment to a ‘Northern Budget’ which could be used to deli... more >
Metrolink customers complete 170k trips using contactless system

16/08/2019Metrolink customers complete 170k trips using contactless system

Since its launch four weeks ago, more than 170,000 journeys have been made using the new contactless payment system on the Metrolink network... more >
Government announces £25m Brexit high-speed medicines train

15/08/2019Government announces £25m Brexit high-speed medicines train

In the event of a No Deal Brexit, the Government has announced the setting up of a high-speed train service to ferry medicine to the UK from Fran... more >

editor's comment

23/01/2018Out with the old...

Despite a few disappointing policy announcements, especially for the electrification aficionados amongst us, 2017 was, like Darren Caplan writes on page 20, a year generally marked by positive news for the rail industry. We polished off the iconic Ordsall Chord (p32), hit some solid milestones on Thameslink (p40), progressed on ambitious rolling stock orders (p16), and finally started moving forward on HS2 (p14) ‒ paving the way for a New Ye... read more >

last word

Encouraging youngsters to be safe on the railway

Encouraging youngsters to be safe on the railway

This summer, Arriva Group's CrossCountry and the Scout Association joined to launch a new partnership to promote rail safety among young people. Chris Leech MBE, business community manager at the TOC, gives RTM an update on the innovative scheme. Recognising that young people are more likely to take a risk trespassing on railway tracks, CrossCountry and the Scouts have come together to encourage Britain’s younger generations to be... more > more last word articles >
board2

'the sleepers' daily blog

Network Rail’s Anna-Jane Hunter on, NPR, TRU, HS2 and supply chain opportunities

12/08/2019Network Rail’s Anna-Jane Hunter on, NPR, TRU, HS2 and supply chain opportunities

Anna- Jane Hunter, is a ‘proud northerner’ and is passionate about continuing the investment and success story of rail across the North.  She plays a key role in working with government and northern leaders to enable the network to carry on thriving. We caught up with Anna-Jane, for her expertise and insight into connecti... more >
read more blog posts from 'the sleeper' >

comment

The challenge of completing Crossrail

05/07/2019The challenge of completing Crossrail

With a new plan now in place to deliver Crossrail, Hedley Ayres, National Audit Office manager, major projects and programmes, takes a look at ho... more >
Preparing the industry to deliver trains for the future

04/07/2019Preparing the industry to deliver trains for the future

The move to decarbonise the rail network involves shifting to cleaner modes of traction by 2050. David Clarke, technical director at the Railway ... more >
Sunshine future beckons for South Wales Railways, says 10:10 Climate Action’s Leo Murray

02/07/2019Sunshine future beckons for South Wales Railways, says 10:10 Climate Action’s Leo Murray

Smart electrification is the way to boost clean energy resources, argues Leo Murray, director at 10:10 Climate Action. Contractors are clear... more >
Ambition doesn’t have to be expensive, says Midland Connect's Maria Machancoses

02/07/2019Ambition doesn’t have to be expensive, says Midland Connect's Maria Machancoses

The TCR Midlands conference is only days away and tickets are going fast for the sector event of the year at the Vox Conference Centre in Birming... more >

rail industry focus

View all News

interviews

Andrew Haines, CE of Network Rail, tells BBC News his organisation could issue future rail franchises

24/06/2019Andrew Haines, CE of Network Rail, tells BBC News his organisation could issue future rail franchises

Andrew Haines, the Chief Executive of Network Rail, has told the Today programme on Radio 4's BBC’s flagship news programme that he wo... more >
Malcolm Holmes, executive director of West Midlands Rail Executive, announced as TCR Midlands speaker in Birmingham

24/06/2019Malcolm Holmes, executive director of West Midlands Rail Executive, announced as TCR Midlands speaker in Birmingham

Ahead of his appearance, Malcolm Holmes spoke with Rail Technology Magazine about what key leaders in the industry were doing to improve rail in ... more >
Advancing the rail industry with management degree apprenticeships

08/05/2019Advancing the rail industry with management degree apprenticeships

In answering the pressing questions of how current and future generations of managers can provide solutions to high-profile infrastructure projec... more >