This morning, National Express Group announced that it will not provide the further financial support necessary to ensure that its subsidiary, National Express East Coast, remains solvent. As a consequence, National Express East Coast is no longer able to continue its franchise agreement to its full term.
The Government’s first and overriding obligation in this situation is to ensure continuity of service to passengers, with no disruption or diminution of service standards. When the Government have had to step in to protect rail services in the past, there has been no such impact on passengers.
I have therefore established a publicly owned company, which will take over this franchise from the point at which National Express East Coast ceases to operate. We will agree an orderly handover with National Express. Until that date, National Express will operate services on the current basis; after that date, the new public company will do so. There will be no interruption of services. Existing operational staff—who continue to provide a good service—will transfer to the new east coast main line company, as will the assets necessary for the continuation of the service. I can assure the travelling public that services will continue without disruption and all tickets will be honoured.
National Express also operates rail services on the East Anglia main line and associated commuter routes. The company has said that it does not intend to default on its obligations in respect of these franchises. Notwithstanding this, the Government believe that they may have grounds to terminate these franchises and we are exploring all options in the light of the group’s statement this morning. In the mean time, we expect National Express to meet its obligations on these franchises in full.
A company that had defaulted in the way National Express now intends would not have pre-qualified for any previous franchises let by the department. I note that the parent groups of previous franchise failures are no longer in the UK rail business. It is simply unacceptable to reap the benefits of contracts when times are good, only to walk away from them when times become more challenging.
It is the Government’s intention to tender for a new east coast franchise operator from the end of 2010. The specification of the new franchise will reflect my concern to secure better passenger services and facilities. I intend to consult fully on the new franchise specification, including with passenger groups, parliamentarians and the Scottish Executive.
The rail franchising system was examined by the National Audit Office last year. It was found to deliver good value for money and steadily improving services. Passenger numbers are at their highest levels since the 1940s, punctuality is over 90 per cent and overall passenger satisfaction is steadily rising. The revenue from rail franchises is enabling us to make record investments in upgrading the network and services on it.