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Ifs, buts, muddle, and backscatter

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Under the 1993 Railways Act, British government bodies such as Directly Operated Railways can only run passenger services in ’emergency’ circumstances, but there is no obstacle to foreign-government companies acting as operators. (Indeed, state-controlled companies from France, Germany, the Netherlands and Hong Kong participate in GB rail franchises.) On 29 October, Corby Labour and Co-op MP Andy Sawford introduced his 10-minute rule Bill to permit a GB public sector operator to compete against private companies for contracts to run passenger rail services.

[‘Labour steps up rail re-nationalisation campaign’, Nathalie Thomas, Daily Telegraph, 28 Oct 2014]

The Department for Transport will next month name which private company has won a competition for a long-term contract to operate the East Coast line. The line has been operated since 2009 by the UK Government-owned Directly Operated Railways, which stepped in to keep services going after National Express handed back the keys to the franchise.

[…] Baroness Kramer, Minister of State for Transport, on Tuesday pointed out the risks involved with bidding for rail franchises, which would have to be borne by the taxpayer under Labour’s proposals.

She said: “It costs something like £7 – 10 million to put in a bid with no assurance of winning. It is certainly a high-risk industry and the margins, even for a successful and profitable company are quite fine.”

The scoring of rail franchising bids is not a transparent process. Suppose a GB public sector entity were allowed into the current franchising environment, spending “£7 – 10 million” on a bid, and were then not awarded the contract? Conversely, if the GB publiCo was the successful bidder, what would be the response from other participants?

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Written by beleben

October 31, 2014 at 11:48 am

Posted in Politics, Railways

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