Adonis gambles on tough stance

In forcing the nationalisation of the East Coast mainline, Lord Adonis, the newly installed Transport Secretary, has set out his stall to Britain's rail bosses: if you are happy to take the profits in the years of plenty, don't come crying to the taxpayer when times are hard.

It has taken no time at all for Lord Adonis to stamp his authority on the DfT, which some had speculated he was not thrilled about joining. He soon laid those stories to rest by demonstrating an encyclopaedic knowledge of train timetables and laying out an ambitious plan to improve the network. Now he has used the East Coast main line to show he means business.

It is a brave decision, though the popularity of the move no doubt played a part. Punishing the perceived arrogance of a private company that hoped to hoard profits while coming to the taxpayer when times are tough always goes down well with the electorate.

National Express could not have been surprised by the tough stance of Lord Adonis. Though it had been in negotiations with him since the start of the year, he had repeatedly refused to renegotiate franchise agreements with any operators. But in making an example of the company, other franchise holders facing problems will be left in no doubt that his bite matches his bark.

However, there are still many aspects of the decision that could backfire on Lord Adonis. Any kudos he has gained for standing firm may be lost if National Express is allowed to walk away with its two other profitable franchises, East Anglia and CC. He is adamant that it cannot, but National Express looks set to dig in its heels.

His credibility may also be hit by his staunch support for a franchising system that now faces heavy criticism. Its critics say it has allowed a major company to walk away from a £1.4bn deal relatively cheaply.

The greatest danger, however, is if his bold move provokes other franchise holders, unable to barter with Lord Adonis over their unprofitable lines, into handing back the keys instead. That could lead to the nationalisation of large swaths of the rail network by the back door.