Why re-privatise East Coast?

Just what is the point of re-privatising the East Coast railway operator?

East Coast is the state-owned inter-city train operator on the main line from London King’s Cross to Yorkshire, the North East and Scotland. It is due to be re-privatised this month.

Along with the rest of British Rail, the service was originally privatised in 1996 but it had an unhappy history in private hands. The first private operator was Sea Containers trading as GNER, but it was stripped of the franchise in 2007 due to financial difficulties. The franchise was then awarded to National Express, which lost the franchise two years later when it refused further financial support to its National Express East Coast subsidiary.

The franchise was re-nationalised in 2009 under the East Coast banner. This was always intended as a temporary measure, so a return to the private sector comes as no surprise. That is not the issue.

As Rachel Graham points out at OurKingdom, the issue is that East Coast is outperforming other operators and providing far better value for money:

The coalition government re-iterated their intentions to re-privatise the East Coast mainline rail network this month. This despite a new report by the Office of Rail Regulation (ORR) showing the line as the most cost efficient. The Financial Times stated that the report proves the East Coast line is “the most efficiently run rail franchise in terms of its reliance on taxpayer funding”.

The ORR report shows the East Coast line required the lowest level of government funding as a percentage of total income, at just 1.2%, a mere 0.2% of the overall share.

The irony of Britain’s privatised railways is that they receive far more in government subsidy – both in real terms and as a percentage of overall income – than British Rail did before privatisation. And this higher subsidy is being provided despite growing passenger numbers.

It is unclear what concrete benefits privatisation of East Coast would bring. The burden on the taxpayer is unlikely to go down. There can be only two possible motives. One is a dogmatic belief in privatisation regardless of the consequences. The other is a scorched earth policy, a desperation to privatise East Coast before the Tories lose the next general election (similar to John Major’s original privatisation of the railways ahead of the 1997 election). These two motives are not mutually exclusive.