“Absurd”: Labour react to East Coast railway sell off

Labour have reacted angrily to the news this morning that the rights to run the East Coast Main Line, which is currently run by a public operator, has been won by a consortium of Virgin and Stagecoach.

The franchise has been in public hands with East Coast since 2009, after then operator National Express ran into financial trouble, and has since returned £800 million to the public purse. However, under current rules, East Coast could not bid for the franchise as a public body. Michael Dugher, the Shadow Transport Secretary, has slammed the situation as “absurd”.

He has also taken the opportunity this morning to reaffirm Labour’s pledge to allow public sector operators to bid for franchises when they expire:

“It’s absurd that our own public operator is the only rail company in the world that has been barred from challenging to run its own services, on the ideological grounds that it is British and publicly owned.

“Labour is committed to legislating to allow a not-for-profit public sector operator to take on and challenge train operators on a level playing field, safeguarding taxpayer and passenger interests and putting in place a system that is fit for purpose.”

While the deal has now been announced, it has not formally gone through yet, and Labour are calling for the process to be postponed until after the election, as it requires a “wholesale review of the franchise process”.

Dugher has also written a letter to the Permanent Secretary to the Department of Transport, Philip Rutnam, to highlight his concerns about the way in which the Government have handled the process. He says the privatisation “does not have political consensus” and that there has been an “obvious political nature” to the handling of the situation.

You can read the full letter here:

Dear Permanent Secretary,

I am writing regarding the announcement this morning of the preferred bidder for the contract to run the East Coast Mainline. 

As you will be aware, the decision by the Secretary of State for Transport to open up a formal competition to privatise passenger rail services on the East Coast Mainline without allowing the existing public sector operator to bid is an extremely controversial, live political issue. 

The Labour Party’s position is that this franchise process should not have happened in this way.  It is not in the national interest and has been rushed through to enable the privatisation of the service before the General Election. 

It is our view that there should be wholesale review of the franchise process and that a different approach is needed – one that puts the public interest first, reverses the presumption against the public sector and properly services passengers.  We are also committed to legislating to allow a British not-for-profit public sector operator to take on and challenge train operators on a level playing field going forward.   

It is clear that the privatisation of rail services on the East Coast Mainline will have significant implications on the performance of the line for many years to come. With only five months before the General Election, such a major decision, which does not have political consensus, should be postponed.  We understand that as the bid process is now in a ‘stand still’ period between ‘award’ and ‘contract signing’, so this should be possible. 

Given the obvious political nature of how this process has been handled, I believe it would now be appropriate for you, as Permanent Secretary, to seek a formal, Written Direction from the Secretary of State for Transport if he still insists on proceeding with this franchise process.    

I look forward to hearing from you. 

Yours sincerely,

Michael Dugher MP

Shadow Secretary of State for Transport