Comment: Trouble in store for rail franchises
Wednesday 12 February 1997
To describe the franchising process as a "sale" is actually misleading. In the majority of cases the only cash that has changed hands has flowed in the direction of the successful bidders, who won the franchises on the basis of how little subsidy they would accept. This appears to have been Stagecoach's undoing when it ran the slide rule over South West Trains. Its bid was indeed impressive - undercutting the BR subsidy by pounds 39m.
Once in the driver's seat it found that in order to make a decent private sector return on a declining level of public subsidy it would have to employ fewer drivers on more flexible terms. This it has succeeded in doing but only at a cost of cancelling services and thereby incurring financial penalties.
In situations like these the first instinct of the Stagecoach chairman, Brian Souter, might be to look for a head and then watch it roll. Unfortunately the obvious candidate has already gone. Peter Field, who used to run South West Trains, was thrown off the footplate last year and replaced by Brian Cox, a long-time Souter lieutenant who makes even his boss look like a pussycat. This looks like making an interesting test of Mr Souter's management machismo.
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