Bus driver pair to run first rail line

Passenger services sell-off: Stagecoach victory balanced by award of two other franchises to management teams

CHRISTIAN WOLMAR

Transport Correspondent

After a series of delays and last-minute changes, the franchises to operate rail services on the London, Tilbury and Southend line and Great Western Trains were signed last night, with both going to the management buy out teams.

Earlier yesterday a bus company which has been frequently criticised for its aggressive tactics towards rivals, Stagecoach, was awarded the first privatised passenger rail line, South West Trains.

The London, Tilbury and Southend team has been given a 15-year franchise on condition it provides new trains within the first few years of the franchise.

Great Western, which was earmarked for a company called Resurgence Railways only for the deal to collapse when Resurgence failed to obtain the finance, has been let on a 10-year franchise, also with promises of investment from the new operators. The Government was determined to ensure that at least one of the first three franchises went to an outside bidder and it is thought that after the collapse of Resurgence, it was forced to allow the Stagecoach deal to go ahead.

The confirmation that Stagecoach, Britain's biggest bus company, had won the right to operate South West Trains, which runs the domestic services out of Waterloo station in London, was immediately attacked by Labour who called it "a sad day for Britain's railways".

Stagecoach has, however, promised that it will "maintain present service levels", keep fares down and improve the quality of service by imposing more onerous Passenger's Charter targets on itself. The company admitted that there would be no chance of buying new trains for the line because the seven-year franchise term was not long enough to justify the purchase of new rolling stock.

Brian Cox, the company's executive director, said yesterday he could not guarantee that there would be no cuts. The company is only contracted to provide up to the minimum passenger service requirements - 86 per cent of the existing timetable - set by the franchise director, Roger Salmon. But, Mr Cox said, Stagecoach "was not in the business of cutting back on services but of building up volumes of passengers".

Stagecoach, created 10 years ago by Brian Souter and his sister, Ann Gloag, has built up its business by taking over 30 companies around Britain, often using methods which have been criticised by the Office of Fair Trading and the Monopolies and Mergers Commission.

Brian Wilson, Labour's transport spokesman, said: "It is particularly ironic that privatisation, which began with rhetoric on competition, has ended up with the first franchise going to a ruthlessly anti- competitive company..."

Mr Souter yesterday defended his company's record, saying that no one had accused it of running poor services or "of not being innovative". The company admits there will be job losses at SWT but hopes these can be achieved by voluntary redundancies.

Mr Salmon said Stagecoach would require on average pounds 49m subsidy per year, compared with BR's net subsidy last year of pounds 63.4m for the SWT services. This will be welcomed by the Government, which has always argued that privatisation would lead to savings, but Stagecoach will struggle to achieve it without industrial strife.