THUS Magazine

Just when you thought it was safe to get back on the buses, one of the undead emerges to cause a train wreck. File this one under ‘you couldn’t make it up’ . . . . . By John J Kelly

UK Monopoly board Community Chest: pass Go, break the bank, run a rail franchise

As we know from our unhealthy obsession with The Godfather, when Roman generals failed their emperor and citizens, they were encouraged to retire to their country estate, fill a bath with hot water and slit their wrists. Different times, different ethics. Further proof that we are indeed living in the Latter Days comes in the form of today’s Guardian report  that Sir James Crosby, former helmsman at black hole bank, HBOS, forced to resign only two weeks ago as Deputy Chairman of the Financial Services Authority (FSA) upon allegations that he sacked a whistleblower for warning of the bank’s reckless investment strategy (Thus passim) is strongly tipped to become Chairman of heavily-indebted East Coast rail franchise holder and bus company, National Express Group (Thus passim). The selection criteria would make fascinating reading, but presumably includes ‘friend of Gordon Brown,’ ‘familiarity with/creation of over-leveraged balance sheets’ and ‘ability to pass the buck.’  

The latest National Express interim results show that turnover increased, profits stood at £70 million and claim that the UK East Coast franchise has launched ‘successfully.’ Yet the Guardian tells us that National Express is now overburdened by debt as a result of over-ambitious expansion on several fronts. Its £3.5 billion debts place it in dangerous territory. National Express is poised to breach the terms of its contract and plans to increase fares over and above the national increase limits by stealth means such as charging passengers a booking fee. Thus the vultures (one of them has a beard – the ubiquitous Richard Branson) are hovering around the East Coast franchise. Chino-wearing National Express CEO, Richard Bowker, an ex-Branson employee and former Lord of Misrule at the now-defunct Strategic Rail Authority has jutted out his chin in defiance and sworn to fight to keep the franchise, but some might unfairly surmise that he might not be too discomfited by a reunion with his old boss, producing an East-West Coast alliance of trains and buses. Virgin Rail Group, part-owned by Stagecoach, a bus operator, jointly (unsuccessfully) bid for the East Coast Rail franchise in 2007. Purely a coincidence, of course.

A large part of the National Express problem is over-leveraged-over-expansion, timed out by the credit crunch. It will unquestionably face problems servicing its debt, especially in a downturn. The fundamental issue might be that running a railway and multinational transport operations is a step up from operating a low cost UK coach company. Sir James Crosby knows a lot about building over-leveraged expansion – he may indeed be considered an expert in this field, but logic would dictate that top of the selection criteria would be ‘ability to understand and run passenger and freight transport operations’. Not a chance. The ability to make and do real things is a low priority in the Monopoly Board game which is UK Plc. It appears that what we need to make the trains run on time is a highly toxic banker. 

Thanks to Simon Taghioff for pointing out this shock-horror revelation. I’m bored with the train story, however, as I expect we all are, and will be moving on to class war next.