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01/07/2009
Government Nationalises East Coast Rail Route
Troubled British transport operator National Express is to hand over its East Coast rail service to the government after losing around £20 million in the first half of this year, due to dwindling passenger numbers.
Transport secretary Lord Adonis said a publicly-owned company will run the line - from London to Scotland - once National Express ceases to operate the franchise.
He also said the government may terminate the company's other rail franchises - East Anglia and the London to Tilbury and Southern franchise c2c.
National Express has failed to renegotiate a deal to pay back around £1.4 billion over the life of the franchise, and as a result the government will put the contract out for tender from late next year.
The Transport secretary said he had been forced to take the drastic action to nationalise the rail line to "ensure continuity of service to passengers, with no disruption or diminution of service standards".
The Department for Transport said that all East Coast services would continue and that tickets would be honoured.
Lord Adonis said: "The government is not prepared to renegotiate rail franchises, because I'm simply not prepared to bail out companies that are unable to meet their commitments.
"It is simply unacceptable to reap the benefits of contracts when times are good, only to walk away from them when times become more challenging."
The rail company, however, said it has taken "clear and detailed" legal advice regarding the move, stating it did not think the Department for Transport would not have the right to recover losses from the breach of the franchise agreement, or take over its other rail contracts.
Meanwhile, National Express announced its chief executive Richard Bowker had stepped down. He confirmed he would be taking up a new position as chief executive of Union Railway in the United Arab Emirates.
(JM/BMcc)
Transport secretary Lord Adonis said a publicly-owned company will run the line - from London to Scotland - once National Express ceases to operate the franchise.
He also said the government may terminate the company's other rail franchises - East Anglia and the London to Tilbury and Southern franchise c2c.
National Express has failed to renegotiate a deal to pay back around £1.4 billion over the life of the franchise, and as a result the government will put the contract out for tender from late next year.
The Transport secretary said he had been forced to take the drastic action to nationalise the rail line to "ensure continuity of service to passengers, with no disruption or diminution of service standards".
The Department for Transport said that all East Coast services would continue and that tickets would be honoured.
Lord Adonis said: "The government is not prepared to renegotiate rail franchises, because I'm simply not prepared to bail out companies that are unable to meet their commitments.
"It is simply unacceptable to reap the benefits of contracts when times are good, only to walk away from them when times become more challenging."
The rail company, however, said it has taken "clear and detailed" legal advice regarding the move, stating it did not think the Department for Transport would not have the right to recover losses from the breach of the franchise agreement, or take over its other rail contracts.
Meanwhile, National Express announced its chief executive Richard Bowker had stepped down. He confirmed he would be taking up a new position as chief executive of Union Railway in the United Arab Emirates.
(JM/BMcc)
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