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East coast mainline: profitable and publicly owned – so why sell it?

This article is more than 9 years old
Public ownership has transformed the service and on the 17.30 to Newcastle, many regulars can't see the point of privatising it
A train on the east coast mainline near Doncaster
A train on the east coast mainline near Doncaster. Photograph: Christopher Thomond for the Guardian
A train on the east coast mainline near Doncaster. Photograph: Christopher Thomond for the Guardian

The 17.30 east coast mainline service from London to Newcastle was late and packed. Sharon Pitchford, Martyn Smith, Tracy Sowersby and Terry Adams, all returning home from work in the capital, were squeezed in by the toilets, along with 25 other standing passengers in the oppressively warm no man's land between coaches E and D. Cue another round of complaints about the state of Britain's railways? Not at all.

"It's pretty good normally," said Adams, 51, an engineer for BP based in Newark, Nottinghamshire. "I find it a lot more reliable and cheaper than the other lines," added Pitchford, 51, a civil servant from Doncaster, as she was thrown into a wall by the train's sudden swerve. "It's very good," agreed Sowersby, 47, and Smith, 55, both NHS executives returning from a conference to their homes near Hull, dodging a swinging handbag as its owner repositioned herself.

Not only did the paying passengers praise Britain's only high-profile publicly owned rail service, they assumed that the difficulties that day were unavoidable (they were right: the behaviour of a passenger on an earlier train had prompted the involvement of the British Transport police, delaying every subsequent service). They also approved of being able to buy £10 one-way tickets and the availability of £24 tickets to London during the Olympics.

That kind of popular approval explains why the government's decision to formally launch the privatisation of the east coast mainline by offering it to tender is causing such bewilderment, confusion and anger among many regular travellers on the London-to-Edinburgh route. On Thursday, a posting by the government in the Official Journal of the European Union in effect told interested private operators, rumoured to include Eurostar and Virgin, to come and get it. The question being asked by campaigners – and the 23,000 people who have signed a petition demanding that the east coast service stay in public ownership – is why?

In November 2009, the then Labour government took the line under public control because its private operator, National Express, could not afford to run it on the terms it had rashly promised back in 2007. Back then it had beaten off opposition from competitors, agreeing to pay the Treasury an increased £1.4bn to operate the franchise until the end of March 2015.

The previous owner of the franchise, GNER, had been stripped of the route after its US parent firm was struck by financial troubles. National Express, a seemingly solid company, was saving the day, and promising to inject £7.4m into upgrading stations, including the creation of 2,000 car park spaces, while the number of weekday trains would rise from 136 to 161 and a new London-to-Lincoln service would be added.

east coast mainline graphic
east coast mainline graphic Photograph: Guardian

It was, according to then transport minister Tom Harris, very good news. Within two years, National Express realised it was losing money hand over fist – but the government was not willing to renegotiate. Lord Adonis, then transport secretary, set up Directly Operated Railways, a not-for-dividend subsidiary of the Department for Transport, to manage the service. The last four years, according to DOR's own accounts, published this month, have been an extraordinary success.

The first half of this year has seen levels of punctuality not achieved by any operator of the east coast mainline "since records in their current form began", although poor weather affected the latter part of last year. The company has won 13 industry awards since April 2012, including that of being Britain's top employer. There has been a 4.2% increase in ticket sales year-on-year, £208.7m returned to the taxpayer during the year in premium and dividend payments, and a record level of customer satisfaction.

And while Virgin, on the west coast, has received £179.6m in revenue support from the government since 2009 and a £1.2bn network grant, DOR has had no revenue support and a lesser, £980m network grant. Back on the 17.30 service, Tracy Sowersby put it succinctly: "If it ain't broke, why fix it?"

The answer from the current transport secretary, Patrick McLoughlin, launching the privatisation on Friday, was that he wanted to see a "revitalised east coast railway, one that both rekindles the spirit of competition for customers on this great route to Scotland and competes with the west coast on speed, quality and customer service".

For Green MP Caroline Lucas, who is championing a private member's bill due for its second reading in the Commons in February that would renationalise the entire rail network, it sounds like a strange goal. Because, she said, such a revitalisation is already afoot.

"The east coast in public hands has paid more money back to the government than any of the private operators. The evidence shows taxpayers are getting better value for money and passengers are getting a better experience as a result of it being in public hands. The fact that the government is so willing to ignore the evidence demonstrates what we have already said: their position is driven by ideology."

It's a suspicion shared, perhaps unsurprisingly, by the RMT union, which has leaked what it believes is a draft prospectus for the east coast rail service's sale with handwritten notes and revisions in the margin. It was, the prospectus says, intended for "investment professionals only" and not for wider circulation.

The union claims that a paragraph noting that the line was "three percentage points ahead of the long-distance train operator average" in the 2012 National Passenger Survey was in the draft but struck out for the final prospectus. It believes the service's successes are being talked down to avoid controversy. The government accuses the union of scaremongering.

As the 17.30 service pulled into Peterborough, in the Great Northern hotel opposite the station, Patrick Brooks, 64, was putting his case forcefully at a passengers' forum hosted by east coast rail. His ire was directed at the local Tory MP, Stewart Jackson, sitting opposite him across an oval boardroom table. "You sit there praising the staff and the service, but you talk with a forked tongue," Brooks told a clearly affronted Jackson. "You can't explain," Brooks added, "why it is a good idea to hand it over to a private provider."

Paul Salveson, author of a new book on the future of the railways, Railpolitik, is equally perplexed. He suggests that, rather than being ignored, the successes of the nationalised east coast service could be a model from which to learn. Salveson wants fresh thinking freed from the market ideology that has governed policy since "Sid" was advised to buy shares in British Gas in the 1980s. Many of the passengers on the delayed 17.30 to Newcastle would agree.

More on this story

More on this story

  • Stagecoach and Virgin joint-venture wins east coast mainline franchise

  • East coast rail has been too successful – quick, privatise it

  • Keeping east coast mainline in state hands ‘like letting RMT call the shots’

  • State-owned East Coast paid £225m to Treasury – but still faces privatisation

  • East Coast rail franchise bidder shortlist revealed by government

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