Out-Law News 2 min. read
26 Mar 2013, 2:08 pm
He said that the East Coast route, which connects London with Edinburgh via cities including Leeds and Newcastle, would be opened to a private sector operator via a procurement process to begin immediately.
In addition, McLoughlin announced that there would be an extension to the existing franchising arrangement on the West Coast line, London with Glasgow via Birmingham and Manchester. Virgin currently operates the franchise under an interim arrangement that was due to expire in November, but McLoughlin has said that the deal will continue to be in place until April 2017.
The Department for Transport (DfT) had previously agreed a deal with Virgin for the company to continue its operation of the West Coast franchise after failings were found with the way officials had handled a competition that sought a new franchising arrangement for the route.
Last summer DfT initially awarded FirstGroup preferred bidder status to run the franchise from 9 December last year, but it scrapped the competition after finding "significant technical flaws" in the handling of the procurement process.
Among the other revisions made to the franchising programme is a change to the duration of the existing arrangements on Great Western and South Eastern routes. The Great Western franchise, currently operated by FirstGroup, was due to end in October but has now been extended until July 2016. The longest extension to the franchising programme affects the South Eastern route, where Govia's operation of the franchise – which was due to expire in April next year – has been extended for 50 months.
"The new programme will provide a more sustainable schedule for rail franchising by delivering no more than 3 to 4 competitions per year, and staggering the 2 principal Intercity franchises, West Coast and East Coast, so they will not be let at the same point in the economic cycle," McLoughlin said in a written statement to Parliament.
Infrastructure law specialist Patrick Twist of Pinsent Masons, the law firm behind Out-Law.com, said that the revised timetable could attract fresh bidders to compete for the franchises.
"Patrick McLouglin’s heavily trailed announcement of the relaunch of the rail franchising programme confirms the Coalition’s commitment to franchising as the structure for train operation in the UK," Twist said. "The staggered timetable for letting the new franchises keeps the two most complex franchises, Inter City West Coast and Great Western, off the agenda and out of the limelight until after the election."
"At the same time, the immediate start to the letting of the East Coast franchise, currently run by the state owned Directly Operated Railways, means that this franchise is scheduled to be back in the private sector before the election," he added.
"With George Osborne looking for every penny of saving it would be interesting to know what the delay to the whole franchise programme has meant in terms of anticipated income and subsidy projections, on top of the £40 million spent to compensate Virgin and First Group on the West Coast franchise competition cancellation. On the brighter side the Department for Transport can hope that a sensible timetable and, potentially, a more efficient procurement will encourage additional entrants into the sector," Twist said.
Following the scrapping of the West Coast main line franchise competition last year the Government ordered a review into the whole rail franchising programme.
In January, Eurostar chairman Richard Brown, the businessman tasked with undertaking the review, concluded that there was "no credible case for major structural change" to the DfT's overall franchising programme. Instead, Brown called on the Government to "strengthen the capability" of the department, simplify processes and consider devolving more English franchise arrangements to Integrated Transport Authorities and other local agencies.
