Interesting news this morning - this is the Beeb's version of it:
( National Express loses East Coast rail franchise )
This is hardly unexpected - there's been speculation about it for ages - but I think it's happened far sooner than expected, and it goes to show what a mess National Express have managed to get themselves into. Less than two years ago, they took over the East Coast route from GNER, who couldn't pay their premium payments to the government. NX bid even higher, and - surprise surprise - they can't pay them either.
The whole thing reeks of utter stupidity. For starters, it shows that the funding model for the railway places far too much risk on the franchise holders, who in turn have been stupid in risking so much to get hold of prestigious franchises - the East Coast is seen as a glittering prize, and NatEx have risked bankruptcy to win it. GNER were so desperate to keep hold of it that they collapsed and nearly took Sea Containers with them.
Second, there has to be something seriously wrong when one of the busiest lines in the country - where trains are still packed, despite the recession - can't make any money because the industry is so fragmented, and so much money flies around to be split up among several parties, all fighting for their slice of the pie. When the structure we work under was revealed in 1994, I was very cynical about it working. Only surprise as far as I'm concerned is how long it took for a TOC to fail like this - and then it happens twice in two years, on the same route.
I think the government is right not to renegotiate - these companies took stupid risks, and if one franchise gets away with not having to meet its obligations, the other eighteen will be clamouring to do the same. But...surely the time has now come to say enough is enough - the fifteen-year experiment with privatisation has failed. We have a decent railway at the moment, but it's been a desperate struggle to get there, and it could have been done so much more easily and cheaply without all the crap we've had to put up with. It was an ideologically-driven piece of lunacy thought up by a Tory government in its death throes, and Labour has done far too little to sort out the mess. Now it's too late - if they don't do something immediately, Cameron will get his grubby mits on it next year and screw things up even more.
The industry's entire funding model is about to collapse, and that means we're all in trouble.