Hong Kong firm to run London's new overground system

A company with a near unbeatable record in train punctuality is to take over a huge slice of London's rail and train network.

Hong Kong based MTR, in partnership with the old established UK firm of John Laing, is to operate the capital's so-called London Overground system - stitching together the creaking North London Line and the soon to be modernised East London tube line.

But the deal has already run into fierce opposition from RMT, the largest rail union, claiming that switching ownership of the East London line to a mainline operator amounted to backdoor privatisation. The union warned of possible industrial action.

Mayor Ken Livingstone, the architect of the proposals, said that joining rail networks in the north and east ahead of the 2012 Olympic Games will "create a new rail artery around the city serving 20 London boroughs."

Around £1.4bn will be spent on new trains and refurbishing stations which in many cases have not experienced investment in decades. Around 400 new jobs will be created.

"This contract paves the way for radical revitalisation of London's rail services which have suffered from years of neglect and under investment," the mayor said.

"It will provide passengers with the staffing, safety and security and customer service they deserve."

The North London line, at present run by Silverlink, part of the quoted National Express group, takes in services between Richmond and Stratford; Euston and Watford Junction; Willesden Junction and Clapham Junction; and Gospel Oak to Barking.

The contract, awarded by Transport for London, takes effect in November and also covers services between Crystal Palace and Dalston Junction from 2010 when trains start rolling on the new, extended East London line.

There was fierce competition for the contract involving rival bids from Go Ahead and National Express, but transport experts say MTR and Laing represented a "dream ticket".

Laing, one of the country's leading developers of privately financed infrastructure projects, operates the award winning Chiltern Railways franchise operating services from Marylebone to the Midlands.

The service has an enviable record - around 95 per cent of the trains reach their destination on time. Yet this still falls short of the 99 per cent punctuality record claimed by MTR, which operates about 3,000 services a day carrying 2.4 million passengers in and around Hong Kong. This will be the first time MTR has operated outside China.

The row over the contract is expected to continue, with unions believing the line should have been left in the public sector.