East Coast rail route to be taken over by Government

THE Government is to take the East Coast rail service run by National Express into public ownership.

The troubled rail franchise, which runs between London, Yorkshire and Edinburgh and is expected to have lost £20m in the first half of this year, is suffering from falling passenger numbers and National Express has wanted to renegotiate the terms of its franchise which sees it paying £1.4bn to the Government until 2015.

Ministers have refused the company’s requests and today the The Department of Transport said that it is taking over the running of the line, guaranteeing that all East Coast services will continue and tickets will be honoured.

“The government is not prepared to renegotiate rail franchises, because I’m simply not prepared to bail out companies that are unable to meet their commitments,” Transport Secretary Lord Adonis told the BBC.

What do you think of this move? What did you think of National Express and can public ownership improve the service between Yorkshire and London? Add your comments below.

In a statement, the Government added that it believed it had also had grounds to end National Express’s other two other rail franchises – East Anglia and c2c which operates services between Essex and London.

But the company said it did not believe the Government had this power and said that it did not expect the Government to be able to recoup any losses from the franchise from National Express.

National Express took over the East Coast rail franchise after previous operators GNER ran into financial difficulties.

Earlier this week, rival transport company FirstGroup said a takeover approach made for National Express had been rejected.

Richard Bowker, the chief executive of National Express, today also confirmed he is to leave the group, to become chief executive of Union Railway in the United Arab Emirates.

In a trading statement, National Express said that the “challenging economic environment” meant it was seeing fewer passengers on the East Coast Mainline and “significant” levels of people downgrading from first-class and full fares.

The firm is trying to reduce a debt pile of about £1.2bn.

Cuts have been made in dividend payouts to shareholders and other spending, while 750 jobs have also been lost.

Last month, the company started charging passengers for reserving a seat on its East Coast and East Anglia franchises.