Did cash buy East Coast mainline franchise?

Aug 22 2009 by Ben Guy, The Journal

MINISTERS handed the East Coast rail franchise to National Express despite another company being assessed as having a better chance of delivering services.

The Department for Transport (DfT) awarded the contract to National Express in 2007 after previous operator GNER handed back the keys as it was engulfed in a financial crisis.

It beat off competition from a partnership of Virgin, Stagecoach and GNER, as well as bids from First Group and Arriva.

But concerns immediately erupted over National Express’s pledge to pay the DfT £1.4bn to run trains linking the North East with London and Scotland – and last month Transport Secretary Lord Adonis announced the franchise would be torn up. And it has now emerged that the DfT chose National Express above another company, which it assessed as offering a better chance of delivering for passengers.

Material released under a freedom of information request shows that National Express got a “performance deliverability” rating of 49.1 out of a maximum 100

The score was “deemed to be acceptable”, while a financial evaluation of National Express’s bid found it had a “medium risk”.

But another bidder – unnamed in the document – got a 54.5 performance score, raising suspicions the huge amount of money offered by National Express decided matters. Other companies that put forward proposals got ratings of 48.5 and 38.5.

The revelations are acutely embarrassing for the Government, especially as the DfT declared all bids had been subject to stringent deliverability tests when it awarded the contract in 2007.

Liberal Democrat transport spokesman Norman Baker said: “It looks to me as if they have made the decision to go for the money and take the extra risk, and it turned out to be a bad bet.”

Ministers plan to nationalise the East Coast franchise before retendering it within 18 months, but Mr Baker said it should be kept in public hands for “years” to restore stability and act as a comparator to the private sector.

A spokesman for the RMT union blasted the system, saying: “It is not going to be transparent or fair because of the nature of private rail monopolies.”

The DfT spokesman said: “Franchises are not always awarded to the bidder with the highest performance deliverability score.”