Rail Franchise Shambles Still A Shambles

After the recent franchise extensions handed to most of the companies running passenger train services in the UK, the media attention gradually drifted elsewhere, but with the process of franchise replacement starting again soon with the Government determined to put in place a new regime at InterCity East Coast (ICEC), the transport pundits are returning to the story.

Eurostar (publicly owned) at St Pancras International

ICEC is at present operated by Directly Operated Railways (DOR), a Government body. DOR had to step in after previous incumbent National Express handed back the keys. But the Coalition has decided, despite Labour calls for DOR to continue, to provide a comparator to all the private sector operators, that ICEC must be put up for tender and returned to private hands.

So far, so predictable. But then came the first indications of interest, and, although the national press has not picked up on it yet, the Government has a potentially very tricky problem coming down the track. And that is because the first companies to throw their hats in the ring are Eurostar and Keolis. They both operate rail services right now, but that isn’t the problem.

The problem is their ownership. Although Keolis sounds like just another of those service companies that operate trains and buses, behind the name it is 70% owned by French state rail operator SNCF. So putting them in charge of ICEC would be a case of taking the franchise off the UK public sector, and, er, handing it to a company which is mostly owned by the French public sector.

It gets worse: Eurostar, which operates services between St Pancras International, Brussels and Paris, is itself totally within the public sector, although this time a number of countries participate. But, as with Keolis, the majority shareholder, with 55%, is, you guessed it, French state rail operator SNCF. Who owns the rest? Well, 5% is owned by SNCB (or NMBS if you prefer).

Whether you prefer the French or the Flemish styling, that company is the Belgian state rail operator. And the other 40%? That is owned by London and Continental Railways (LCR). And guess who owns LCR? Yes, the British Government. So if Eurostar gets its joint hands on ICEC, the franchise will have been taken off one part of the UK public sector, only to be partly given back to another.

And you all thought it could not get any more shambolic after the DfT loused up the award of InterCity West Coast (ICWC) and caved to Virgin Rail Group’s legal challenge? Remember also that other names in the frame could include Abellio (that’s part of the Netherlands’ state rail operator NS) or Arriva (part of the German state operator DB). Or even Renfe (Spanish state rail operator).

It’s called a shambles for a good reason: because it is a shambles.