GNER chief attacks franchising process

The head of one of Britain's flagship rail routes has condemned the Government's whole franchising process and accused ministers of misleading him over his network's potential profitability.

At a private lunch meeting Christopher Garnett, the chief executive of Great North Eastern Railway, let rip on a range of issues, accusing Whitehall of exercising an "extraordinary" amount of control over the industry and warning of fares rising "quite heavily" in the next few years.

Addressing industry leaders, Mr Garnett tore into the decision of the Office of Rail Regulation last week to deny GNER extra services on the East Coast main line route.

He said the ruling that an "open access" operator should gain slots instead would mean the Government would not get the £1.3bn premium over 10 years agreed in the franchise deal. Under government "open access' policies a company can apply to run services on routes already covered by a franchise.

The regulator's decision had not only undermined GNER, it damaged the industry and cast doubt on the viability of other franchises such as that covering the South West main line, run by Stagecoach.

The Department for Transport had let the East Coast franchise on the basis that bidders should "ignore" any threat from open access operators despite the fact the Government's policies provided for such competition.

Speaking at a lunch organised by Modern Railways magazine on Friday, Mr Garnett said: "The DfT are letting franchises on the basis of saying 'ignore open access', yet their White Paper said there is open access."

He said the South West Trains timetable covering the routes out of Waterloo contained "padding" and that open access operators would argue for those slots. He said the decision to allow Grand Central Railway to operate between Sunderland and London on the East Coast line had taken "half the franchise" from GNER.

"That's not the basis on which we bid and it's not the basis on which the department told us to bid." He said since the abolition of the Strategic Rail Authority, an "extraordinary amount of government control" had developed.

If GNER fails to produce the revenue it promised as part of its bid for the franchise, ministers could decide to offer the licence to other operators. But it is doubtful if any other company could fulfill the promise of a £1.3bn premium without huge rises in fares.

A spokesman for GNER said it would be a "very partial" representation of Mr Garnett's speech to suggest he was attacking the Government. He confirmed GNER was considering legal action over a system which allowed open access operators to bid for slots on the basis of lower charges.