The news that the First Group has been awarded the franchise of the West coast Mainline at the expense of Virgin was greeted with equal parts glee and dismay from different segments of the public. Transport companies, like mobile phone network providers, are not much loved because the services they provide are so vital to our everyday lives that we take them for granted. The only time we consider the services we are being provided is when they go wrong, and we are thrown into disarray. A delay free journey is our minimum expectation, anything less will leave us feeling negatively about the service we feel that we have increasingly overpaid for in the first place.
Anecdotally, people on the street could provide you with a multitude of reasons why one train company is less customer friendly or provides an inferior service to another. Comments on the BBC and Guardian websites range dramatically from stories of train drivers reversing back into stations to help pram pushing mothers onto carriages, to unexplained 8 hour delays. The reality is that the majority of these complaints are subjective and based on one person’s negative experiences which have understandably stuck with them. It’s a fair bet to suggest that when the first drop of snow falls this January Britain will be plunged into another bout of predictable travel chaos and whether the lines are ran by Virgin, First, or the Government directly, it won’t matter.
What does matter though is the way the bidding process has been run, and what this says for the future management of the line. Richard Branson has called the outcome of the bidding process ‘insanity’, and despite his obvious sour grapes, he does have the semblance of a point. First Group’s bid wasn’t just larger than Virgin’s, it blew it out the water - £5.5 billion, compared to £4.8 billion. First Group have promised the earth, extra routes, 11 new trains, and 12,000 extra seats. But many doubt that First Group will able to run the line profitably without reducing the quality of service and laying off staff – and just today the Telegraph reported that the firm’s BBB- credit rating could be downgraded to junk if its credit profile deteriorated over the next two years.
There is precedence for this. Both GNER and National Express tabled huge bids for the East Coast Mainline, and were unable to deliver on the full term of the contracts, finding their budgets unduly squeezed by the size of the initial bids they made. Railways are after all, not a profit making business – they are still subsidised by the government, a direct recognition of the vital part they play in civic life. The East Coast Line is still owned by the government three years later.
Whether the railways should have been privatised in the first place or not given the central role that transport plays in the British economy is a much bigger discussion. But whether they are publicly or privately owned; if the railways are not running safely, affordably, and efficiently, everyone suffers. The government’s desire to reduce subsidies to the railways (and thus make them even less profitable for the private sector to run) seems incompatible with this decision to sell to the highest bidder and create a situation where a public service will be run for profit on an ever diminishing margin. Coupled with the news this week that rail fares are to increase on average twice the rate of inflation, these are worrying times for the average rail traveller.
This decision making process could have been improved by a stronger analysis of the different elements that go into producing a bid. First Group calculated that the West coast line will grow by 10.4% a year compared the Virgin estimate of 8.5%. Unions and passengers alike will be hoping that both the Government and First Group have done their due diligence and the shambles on the East coast isn’t replicated on the West.