East Coast set to remain in the public sector (sort of)

There are some stories in the modern railway that you could not make up because they would be too far-fetched. The story of  the PPP on the London Underground was one, but now we have another great one. Eurostar is bidding  jointly for the East Coast franchise with Keolis, which normaly partners Go-Ahead.

Now of course this is the franchise that is being rushed through for privatisation because currently it is in the hated public sector, being managed by Directly Operated Railways, an arm of the Department for Transport. So Patrick McLoughlin, the Transport Secretary, rather than choosing to offload some of the more troublesome franchises, which instead are being given extensions negotiated from a weak position by the Department, is rushing ahead with East Coast privatisation so that it will no longer be a successful embarrassment in the public sector.

But hold on a sec.  Eurostar is currently owned 55 per cent by SNCF so that is hardly the private sector. And another 5 per cent is in the hands of the state owned Belgian railways, SNCB. That leaves the remaining 40 per cent which is owned, euh, by London & Continental Railways which sits alongside DOR as part of the Department for Transport. So not much public sector there.

As for Keolis, which calls itself France’s biggest private sector transport provider, well that is 70 per cent owned by SNCF and the rest belongs to The Caisse de dépôt et placement du Québec, a Canadian pension fund.  That half of 30 per cent, therefore, is the only private sector involvement.Of course other 100 per cent state owned companies are always set to throw their hats in the ring, such as Arriva – owned by Deutsche Bahn – or Abelio – the Dutch railways outfit. And can I see RZD, the Russian railways over the horizon?

So the question for Mr McLoughlin is what are the rules for this game – when is privatisation in effect renationalisation, only to a different country?  As I said at the beginning, you could not make this up. And is it not a bit strange that Richard Brown, the man you appointed to look at franchising following the West Coast fiasco, because he was impartial and not involved in the franchising process, is now involved in a bid under the rules that he helped to create? #justasking

  • Fred Rodgers

    Below is an extract from my letter to McLoughlin of 30/09:

    “However, it really
    does show what a bugger’s muddle you are making of franchising, particularly by
    allowing any other country, as well as your own L&CR, to participate in
    franchise bids but, despite the overwhelming public opinion against you,
    refusing to permit your own East Coast Mainline Company to do so!”

  • Bresm

    Yesterday, the Times reported that lawyers have warned that Eurostar my not be allowed to bid because they are 40% owned by the UK taxpayer. However the lawyers have not been identified and, of course, they make no mention of the fact that French, German and Dutch taxpayers already have a large stake in Britain’s rail services.

  • Bresm

    I would be interesting to hear what McLoughlin has to say in reply to your letter.

  • Fred Rodgers

    McLoughlin never replies but I did hear from DfT’s Passenger Benefits Advisor (sic) once but it’s usually a J Hobbs, correspondence manager, who replies.

  • gary

    Of course there is no guarentee that this joint venture bid would actually win the franchise anyway, it could end up in completely private hands should either First Group, Stagecoach or Virgin get it. And lets also not forget that the likes of Network Rail are now starting to bid for rail ” opportunities ” elsewhere in the world……a recently announced consulting win in Australia springs to mind.