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East coast rail line to be nationalised ahead of schedule

• Handover brought forward as funding for route is running out
• National Express could also be stripped of other franchises

* Dan Milmo
* guardian.co.uk, Thursday 5 November 2009 10.06 GMT

Britain's most expensive rail franchise will be nationalised earlier than expected when the Department for Transport takes over the £1.4bn east coast main line – a flagship of the privatised rail industry – from National Express next week.

Civil servants will find themselves competing with private train operators shortly before midnight on Friday 13 November when a specially created company, Directly Operated Railways, assumes control of the London-to-Edinburgh route for at least 18 months. The new franchise will be called East Coast and will be run by Elaine Holt, a former senior executive at FirstGroup, one of Britain's largest rail and bus companies.

The DfT had been working towards a takeover date of 12 December, but brought forward its schedule last night after National Express said its dedicated funding for the route was running out. Lord Adonis, the transport secretary, promised an "orderly handover" despite the short notice.

"I can assure the travelling public that services will continue without disruption and all tickets will be honoured," he said.

The RMT union, a staunch critic of the franchising system, warned that one of Britain's most prestigious rail routes could "end up in the realms of crisis management". A spokesman for the RMT said: "I don't see how you can have a smooth handover in seven days. This is a major rail fleet that is being handed over."

However, National Express executives are confident that the business and its 3,000 employees can be transferred successfully. Despite promises to "challenge the status quo", the immediate changes instigated by Holt will be cosmetic. East Coast trains and station signs will be rebranded, while staff uniforms will also change. Ticket prices will not be altered, although National Express has yet to confirm next year's unregulated fare costs, which are expected to rise above inflation; the potentially unpopular announcement will now have to be handled by the government.

A rail industry source warne east coast main line jobs could be under threat because the Treasury will want the business in leaner shape before it is re-let in the summer of 2011. "The franchise is in a poor financial state and the Treasury says it has to be brought under financial control before re-letting. Elaine Holt has been told to be 'as tough as you like'," the source said.

Lord Adonis is also determined to strip National Express of its remaining franchises, Essex commuter services National Express East Anglia (NXEA) and c2c, but the DfT is still taking legal advice on whether it can use cross-default guidelines to reclaim the contracts. National Express is adamant that the DfT has no legal grounds for taking back NXEA and c2c and reiterated that stance this morning, while the DfT made no mention of those contracts in its statement.

"The group has two other rail franchises in the UK which are not subject to the termination notice announced today," said National Express.

National Express East Coast franchise nationalised

• Train service taken over from next Saturday
• Public ownership will last for at least 18 months

* Dan Milmo, transport correspondent
* guardian.co.uk, Friday 6 November 2009 22.12 GMT

Back in the day, British Rail was synonymous with soggy sandwiches, late trains – or no services at all. Deserved or not, it was a reputation that became immortalised in the comedy, the Fall and Rise of Reginald Perrin – every morning, his train to Waterloo was reliably late, but always for a different reason.

From next Saturday, though, the government will get a chance to make some amends, when it returns as a long distance train operator for the first time since privatisation in the mid-90s.

Passengers on the prestigious London to Edinburgh route have been promised punctuality, good food and clean loos.

The Department for Transport has seized control of the failed £1.4bn National Express East Coast franchise. Apart from a stint running the Southeastern service earlier in the decade, the government has ducked complaints over fare hikes and poor catering by letting the private sector take the flak – and the profits.

That will change when the DfT launches the frugally titled East Coast franchise with the aim of keeping the route under public ownership for at least 18 months while funnelling the proceeds into its coffers.

Elaine Holt, the head of East Coast, said the 18 million annual passengers will soon notice improvements to facilities and complimentary first class meals. "There are areas where customers are not satisfied when they should be, like toilets. There is a whole raft of things that can be improved."

Holt said the free food for premium passengers – "they just get a biscuit really" – will be beefed up, although the upgrade might extend to pastries and peanuts only. The trolley for passengers in standard class will also get a makeover, with Holt pledging that any changes will reflect a specially commissioned passenger survey. "Customers told us they want different things," she said.

Punctuality is already strong, with nearly 90%services on time but Holt pledged further improvements.

With the reassuring tag line of "business as usual" the most noticeable changes will be cosmetic, with the National Express logo excised from all trains and station signs by the end of next month.

The DfT is banishing the name of a company that defaulted on its contract just two years into a decade-long deal after it said it could not afford franchise payments, leaving ministers with a £1.4bn hole in the rail budget.

It was the second time that the route had been handed back in three years, following in the footsteps of GNER in 2006, prompting calls from Labour backbenchers and trade unions to scrap the rail franchise system.

Next week's launch of East Coast has given some hope to privatisation's critics but Holt warned rail nostalgists not to expect a return to the days of BR. She won plaudits at the private train operator FirstGroup and pledged a commercially aggressive approach in her new role.

"I don't see this as a step backwards into some sort of BR or public sector-type environment," she said. "It is a commercial company that happens to have the government as its owner."

BR was replaced by the ill-fated Railtrack when the network was sold off, while train franchises were carved out of individual routes such as east coast and auctioned to private operators.

Railtrack's chaotic demise in 2002 is seen by many within the industry as an indictment of privatisation, amid fierce criticism of the steep fare increases regularly imposed by franchise owners.

Holt admitted that East Coast will impose the above-inflation fare hikes that National Express was planning for January, even though the new business will not have to meet the franchise payment of around £180m next year that helped derail the route's former owner. "I am not going to sit here and say that just because we are a government-owned company we are going to slash fares."

She added: "Like any train company, we will be making the equivalent of premium payments to the DfT. They will not be in the order of £180m per year. If we were to make the same payments as National Express the franchise would be in trouble again next year."

East Coast is expected to increase the price of some advance and off-peak fares that are not protected by price caps, drawing criticism from green groups who see the East Coast transfer as a chance for the government to wean long-distance travellers away from planes and cars.

Cat Hobbs, of the Campaign for Better Transport, said: "We want the government to make sure it runs the franchise in passengers' interests and does not go ahead with fare increases. We also want the DfT to keep the franchise in the public sector beyond 2011 as a benchmark to see whether other franchises provide value for money."

The transport secretary, Lord Adonis, is determined to strip National Express of its remaining franchises, the Essex commuter services National Express East Anglia and c2c.

The RMT, the largest rail union, believes all 16 major franchises should be brought under public ownership. "The failure of the east coast franchise for the second time should kill off the rail privatisation policy which has been an expensive disaster," said Bob Crow, RMT general secretary.


A rail journey through the best of Britain

As the government takes over the east coast mainline, Martin Wainwright climbs aboard and finds breathtaking scenery and nostalgia for British Rail

* Martin Wainwright
* guardian.co.uk, Friday 6 November 2009 17.13 GMT

From the Throat which tunnels trains out of King's Cross to the grand sweep of Waverley station in Edinburgh, the east coast mainline is a slender corridor through the best of Britain.

Even the whopping fares charged by National Express seem less painful when you gaze across the dunes to Lindisfarne or swoop down South Bank in otherwise pan-flat Lincolnshire where Mallard set the world speed record for steam engines (125.88mph or 202.58kph) in the summer of 1938.

Every mile has that sort of history, from the weatherbeaten sign in a field which marks halfway between the English and Scottish capitals, to signalboxes where dining car staff flung out potatoes with messages in knife slits.

"Load 60 more chickens at Retford," was typical of these appeals. Britain's first restaurant service on rails, the Yorkshire Pullman between Leeds and London in 1879, offered breakfast and lunch one way, tea and dinner the other, and promised to get its passengers back in time "to take a light supper at home".

A decline in dining has been an indicator of the line's wider financial troubles, with the sumptuous silver service offered by GNER giving way to only a handful of restaurant cars still offered by struggling National Express. On the 8.05 from Leeds today, there were quips about nationalisation bringing back the notorious British Rail sandwich, but a much greater nostalgia for grand old east coast days.

"It's a national institution, so maybe the nation should own it," said Malcolm Whitley, who got on board at Doncaster – where once, in the giddiest days of Thatcherism – people talked about London's commuter belt stretching this far, because of the line's high-speed trains.

A newspaper check at the time found that business predecessors of Whitley mustered only ten season tickets to King's Cross among them; but until recently, concession fares, obtainable in advance by those who can master the complex system, have kept the big trains chock full.

That has changed; partly because of rising prices and also with a doubling of services to leave Leeds every half hour. But temporary nationalisation will give economists a handy model for comparing state and private sector ways of working. In spite of National Express's woes, two rival companies have set up services to Hull and Sunderland from the capital which use the main line as far as Doncaster and Northallerton.

Grand Central trains to Sunderland, with their Art Deco panels on matt black livery and Marilyn Monroe portraits, are managed and largely manned by GNER refugees who fled from National Express. Their trains ring with Sunderland's mackem accents, and there are plans to bring direct routes to Bradford and possibly Huddersfield; local loyalty may ride to the private sector's rescue.

The new "British Rail" trains retain one advantage, though, which suggests that the title God's Wonderful Railway should be taken from Brunel's line to Plymouth and Penzance and relocated North. Where else can a passenger be ambushed by two World Heritage Sites with a window space – Durham cathedral and castle – or watch seals after crossing the most concentrated group of river bridges in the country, rising over morning fog on the Tyne?

It's All Aboard The Nationalised Express

2:37pm UK, Saturday November 14, 2009

Damien Pearse, Sky News Online

One of Britain's busiest rail lines has been renationalised amid promises to improve services and passenger facilities.

Transport Secretary Lord Adonis checked out the publicly-owned line for himself by taking a train from London King's Cross to York.

He was accompanied by Elaine Holt, chairman of the newly-created East Coast rail company.

It will run the London-to-Scotland East Coast main line for the next two years.

The Government took over the line at midnight on Friday after cash-strapped National Express gave up the franchise.

As Lord Adonis and Ms Holt headed north, the RMT rail union staged a demonstration at Newcastle station.

Protesters waving banners and blowing whistles urged the Government to keep East Coast in the public sector permanently.

Both Lord Adonis and Ms Holt have promised that services and passenger facilities on East Coast will improve while the line is publicly run.

There will be £12m worth of station improvements, including work at Newcastle, York and Peterborough stations.

Catering improvements, cleaner trains and stations, some extra weekend services and more cycle-parking places at stations are also planned.

Ms Holt has insisted the creation of the new company is not a return to old-style nationalisation or a throw-back to the old days of British Rail.

She maintained it will be run as a commercial operation and be independent of the Department for Transport.

Some of the profits will be returned to the taxpayer - although premium payments to the Government will be lower than those of National Express.

National Express also runs the East Anglia franchise as well as services on c2c, the London to Tilbury and Southend line.

Rail unions want the company to be stripped of the two franchises, claiming it has done a poor job.