On 1 July I informed the House that National Express East Coast (NXEC) was expected to default on its franchise to operate rail services on the east coast main line and that in consequence I would establish a state company to ensure continuity of service from the date that the company ceased operations.
The NXEC franchise was terminated on 13 November when a state company, East Coast, took over the service with minimal disruption. I have since announced that the East Coast Company will manage the franchise for two years, until November 2011, so that the Government can review options for a new franchise and consult widely before it is re-let.
The termination of the NXEC franchise on 13 November is a default under the National Express East Anglia (NXEA) franchise. Having considered the relevant facts, I yesterday notified NXEA that its franchise will terminate on 31 March 2011, without the extension to 2014 which would otherwise have happened. The process for securing a new operator will start immediately so that after full consultation a new franchise can begin from April 2011.
In determining the future of the C2C and NXEA franchises, my overriding concern has been to minimise disruption to passengers and staff, and cost to the taxpayer, while ensuring that train companies stand by their commitments. I judge these objectives are best served by:
terminating NXEA’s franchise in 2011, causing it to forgo three years of profit; and
beginning the refranchising process immediately so that a new operator is in place in early 2011.
However, my judgment is that the public interest would not be served by terminating the franchises immediately, necessitating state management during the refranchising period and three operators in two years.
National Express remains bound to comply with its obligations under its franchises. My department will be monitoring performance closely in the coming months to safeguard the interests of the travelling public.