You'll probably have seen this already if you're based in the UK as it's been all over the news, but yesterday talks between NXEC and the Department of Transport over a possible renegotiation of the East Coast rail franchise broke down. NXEC were meant to be paying the DfT £1.4bn over the 10 years' duration of the franchise but this was based on passenger forecasts that were optimistic to begin with, and as the recession bit, it became clear that NXEC was going to run a massive loss. Hence, the government had to step in to keep those goddamn trains running.
Whose fault is this? Well, really a combination of National Express (for making a reckless franchise bid) and the Government (for accepting that reckless bid in the first place). As a monopoly operator of the East Coast rail route, NXEC could expect to make substantial profits under normal economic conditions, but even so, £1.4bn is a hell of a lot for the govt to cream off from the railway. And environmentally it makes no sense whatsover - we should be subsidising the railways to get more people out of their cars and reduce overall CO2 emissions. (Network Rail, the infrastructure operator, does receive a subsidy but this is not enough to offset the East Coast franchise premium payments.
Of course, National Express have tried to weasel out of their liabilities for defaulting on the contract by claiming that NXEC is a separate company to the rest of the National Express group and so their liability should not extend into the rest of the company. For example, they argue that the Government shouldn't be able to take over the other 2 franchises that National Express runs (National Express East Anglia and C2C, which runs the Southend to London Fenchurch St line) as compensation for NXEC's failure. This is blatant financial engineering by National Express to try to swindle money out of the taxpayer by any means possible, and if necessary the Government should make retrospective changes to corporate law to make parent companies liable for losses incurred by fully owned subsidiaries so that National Express can't get away with this.
I'd be very happy to see the back of National Express on the East Anglia rail service as well. They deliberately run trains with fewer carriages despite overcrowding to save money on fuel costs. They have imposed progressively more ludicrous evening ticket restrictions to stop people travelling on cheap tickets in the evening rush hour - again to save money instead of running longer trains, which is what people really want. And they deliberately fail to advertise the Network Railcard, which provides 1/3 off off-peak fares, in case people find out about it and save money. F*** them.
And full marks to Transport Secretary Andrew Adonis - not my favourite politician at all most days - for standing firm in the face of National Express's attempts to renegotiate their franchise just because of the recession. Adonis reasoned - correctly - that if he gave way on this franchise it would open the floodgates and every other two-bit rail operator would be hammering on the door for the soft treatment. He did The Right Thing.
But he plans to re-franchise to a private operator as soon as possible, which is a pain. There have been some improvements to the rail rolling stock under private ownership, it's true (although that was partly the result of a dreadful lack of investment under British Rail, which was starved of cash from its inception in the 1940s). The crappy old slam-door trains are long gone, which we can all be grateful for. But in most other respects, privatisation has been a disastrous failure. Lack of maintenance caused a sequence of dreadful crashes and disasters - Hatfield, Potters Bar, Ealing, etc. - and forced the nationalisation of Railtrack (Steve Byers's finest hour!) Fares have rocketed sky-high, especially for people who want to buy their ticket on the day of travel. And investment in new lines and tracks - Eurostar excluded - has been piecemeal. The recession presents an ideal opportunity to bring public enterprise back to the railways and Labour would be best advised to grab it with both hands. At the very least, a pledge to renationalise would provide a clear dividing line with the Tories at the next election (unless Cameron copies it, which is very possible.)