Blood on the tracks

National Express, hit by a recession-caused fall in passenger numbers, has for some time been seeking to renegotiate the terms of its franchise. The original agreement was based on usage growth, and the company had agreed to pay £1.4 billion to run the line until 2015 - an amount that looked high, even in those pre-credit crunch days. Unable to fulfil these obligations, the government has stepped in, taking control and stating that it is not prepared to renegotiate rail franchises.

The rights to operate the service are expected to be sold in one year.

Form guide

The Government has assumed control of a franchise before, taking Connex South Eastern’s (CSE’s) franchise (covering Kent, some of East Sussex and South East London) in 2003. The resulting operation, South Eastern Trains (a subsidiary of the Strategic Rail Authority), was the only non-private franchise in the UK. And, to the embarrassment of a Government committed to the continuing privatisation of the railways, it began to outperform its non-publicly owned rivals.

So what if this scenario repeats? If passenger numbers continue to fall, and the SRA proves better than National Express at running the East Coast mainline service, will private operators be keen to purchase the franchise at the price the Government wants? In one year's time they may be faced with train users who have become used to an improved service but are still dwindling in number, reducing the revenue generation available.

Interestingly, the Government has also stated that it may have grounds to end National Express's two other rail franchises - East Anglia and c2c. Perhaps more operators will soon start to struggle. And perhaps more people will start to use the word that neither the Government nor transport companies want to hear - nationalisation.