State-run East Coast Main Line made more profit figures show

The East Coast Main Line has been more profitable while being run by the Government, new figures show

A train at Newcastle Central Station
A train at Newcastle Central Station

The East Coast Main Line has been more profitable while being run by the Government, new figures show.

The figures, obtained by Gateshead MP Ian Mearns, show that the state-owned Directly Operated Railways, which has been in control of the line since 2009, has paid almost twice as much back to the Treasury as its privately run predecessor.

Union leaders, North East MPs and rail passenger groups last night seized on the figures to step up their campaign to keep the East Coast Main Line in public hands.

Last night the region’s RMT representative Craig Johnson praised Mr Mearns for “exposing the farce of privatisation” through a written parliamentary question to Transport Secretary Patrick McLoughlin, and called on the Government to reconsider privatisation plans.

He said: “If you believe, as I believe, that links to the capital are essential for the communities, people and economy of the North East then we need to look to have a sustainable and quality service.

“Yet franchises only give stability to the spivs and speculators and nothing to the people up here.”

When Britain’s railways were first privatised the Government paid a subsidy to the companies selected to run the railways, but over time that has reversed so that franchise owners like Virgin and formerly National Express and GNER give the Treasury a “premium payment”.

The level of payments offered can be a major factor in the Department of Transport’s decision over who gets the contract to run a franchise, with recent figures from bids for the South West franchise showing the eventual winner offered to give the Treasury more than twice as much as its nearest rival.

But critics of the franchise process say that offering to pay high premiums to the Government at the same time as keeping shareholders happy leads to bad value for the taxpayer.

According to the figures released to Mr Mearns, between 2009 and 2013 DOR returned £602m in premium payments, compared to National Express East Coast’s £370m between 2007 and 2011. The RMT also points to separate figures which they claim show that between 2009 and 2012 the West Coast franchise, which is in private hands, returned just £282m - £149m less than East Coast.

“Ian Mearns and others have done a brilliant job in getting this information because it derails the Government’s argument,” said Mr Johnson. “The Government says they want the best deal for taxpayers, but when it comes to rail privatisation that is just rubbish.”

The bidding process to run the new East Coast franchise opened in March, with transport minister Simon Burns citing the route’s comparatively poor punctuality record in April as proof that the private sector would do better on the line.

A meeting of the Northern TUC and the region’s MPs was held this week to step up the campaign to keep the franchise in public hands.

The Department for Transport did not respond to requests for comment from The Journal yesterday.

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