Kicking National Express was a good call from Labour

July 5, 2009

First, let me apologise for foolishly assuming that National Express, the (privatised) UK bus company, chaired until last week by well-connected Richard Bowker, was clever enough to engineer a de facto merger with Virgin Trains/Stagecoach (Thus passim) and thus recreate a large part of the old subsidised British Rail monopoly under the guise of privatisation. I also apologise for stating the National Express was profitable: it was, until it grossly overbid for the UK’s East Coast Railway franchise. With decent rolling stock a clear run from London to Edinburgh and beyond, taking in Peterborough, Leeds, York, Newcastle along the route, even National Express should have been able to make money. But recession hit passenger numbers on the jewel in the crown of the UK rail network, and as we all know, the name of the game in privatisation is short term gain for no pain. Under pressure to defend a takeover bid from a rival, First Connect, Bowker went cap in hand, revolver in the other hand, to the government, proposing that unless the franchise terms were renegociated and more subsidies provided, National Express would need to walk away from the franchise.

In his previous guise as Chairman of the Strategic Rail Authority (not strategic and with no authority) he had seen the ploy work time and time again, especially when practised by his old boss, ‘Sir’ Richard Branson, part owner of Virgin Rail. But this time he ran out of track. Labour’s new Transport Minister, ‘Lord’ Andrew Adonis, was in no mood for handing out second chances, especially fresh from the horror of allegedly spending the last six months travelling around Britain by train (probably First Class). He threatened National Express with the loss of its remaining two franchises if it walked away from the East Coast then took the initiative last week and announced that the government would temporarily renationalise while arrangements were made to re-tender. His argument, that a rail franchise was not just for Christmas, is hard to counter. But National Express couldn’t believe what it was hearing. Its website is still in a state of shock:

“Following reports in the media about National Express East Coast, we would like to ensure all our customers have the correct information. National Express East Coast is continuing to run the East Coast business and we will continue to operate all of our services to current timetables. Despite suggestions that the Government is taking over the running of East Coast today, this is absolutely NOT true.”

“Further comments that the National Express Group has “financial problems” which have led to it “defaulting” on its commitments to East Coast are also NOT true.”

These are serious allegations. If these reports are ‘not true’ then National Express are accusing the government and Transport Minister of misleading and lying to the public – Adonis made his announcements on national radio last week. Moreover, Bowker resigned the day before the announcement, and is moving to a job in the Gulf. Incredibly, National Express claim his departure was entirely coincidental.

The truth is that the government has weighed up the potential damage of propping up yet another privatised lame duck and has decided that renationalisation will win more votes. In the current climate, they may have made the right call. Moreover, as the song from the Divine Comedy illustrates, National Express is hardly a benchmark of operating excellence. Whether in public or private hands, poor service, high prices and abuse of quasi-monopoly conditions – British rail fares are amongst the highest in the world, despite burgeoning demand – are a recipe for failure. The Tories engineered the rail privatisation disaster. To its credit, Labour saved the system from collapse by renationalising Network Rail, the infrastructure provider, in 1992. But Bowker, Branson, Souter and uncle Tom Cobbley have filled every orifice with public cash subsidies for marginal service improvements in the intervening 16 years. Adonis called it right. If someone would call the bluff of the larcenous utility companies, Labour might be in with a fighting chance of turning public opinion round. A public utility franchise is not just for Christmas.