The news broke recently that the East Coast Main Line will once again be under the control of government. With this marking the third time in a decade that the troubled line has needed government intervention, many people are asking questions.
Whilst successive bidders have clearly seen potential and profitability in the East Coast Main Line, there seems to be a recurring theme of financial loss and failure. With questions flying over the bidding process, profits and the future of the line, let’s take a look at what’s going on.
A Series of Failures
Back in 2005, GNER took over the East Coast Main Line. Tendering a bid of £1.35bn, the deal was the largest contract ever seen in Europe at the time and it seemed the 10-year deal was a sure thing. Fast forward to a year later and already things were looking grim. GNER’s parent company – Sea Containers- was experiencing big financial problems, which had a knock on effect for GNER. After protracted wrangling, GNER was stripped of the route and new bidders put forward their plans.
August 2007 saw National Express take over the beleaguered route for £1.4bn, but they gave the line back to the government as they became mired in the 2009 financial crisis. The government then took over the running of the East Coast Mainline until the acceptance of a joint Virgin-Stagecoach bid in 2015. Coming in at £3.3bn, it was hoped this would be the last of the turmoil associated with the line.
And that brings us up to date. Re-taking the line under state control, the government has contended that Stagecoach and Virgin overbid and over-estimated the profits to be had. The former operators, however, have said that Network Rail has undermined them by failing to update tracks, which would have allowed more trains on the route.
Is the Government to Blame?
Whilst the government and Transport Secretary Chris Grayling have pointed the finger at Virgin and Stagecoach, many people are asking if the government had a role to play.
Labour has stated that the lack of any conditions placed on operators by the government was “ludicrous”. At the same time, the level of bids, the tendering process and government vetting procedures have all come under intense fire. Commentators are also pointing out that these failures ultimately come down on the taxpayer, whilst ticket prices continue to rise.
Whatever the causes and the costs, the East Coast Main Line will be up for bids once again in 2020 and it will be interesting to see how that turns out.