East Coast operator warns of job cuts

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The new operator of the East Coast main line, Britain's most modern rail line, promised better reliability and cleaner trains but warned of job cuts among the 2,900 staff.

Great Northern Railway, a subsidiary of Sea Containers the Bermuda-based transport company, will initially receive more subsidy than currently paid to British Rail to run services on the line which runs between King's Cross, York, Newcastle, Edinburgh and Inverness, but at the end of the seven-year franchise will receive no financial support at all.

The company will get pounds 64.6m, compared with pounds 59.89m for BR, but with improved marketing and reduced costs, Sea Containers is confident that it can still make a profit even though it will receive no subsidy by 2003. Sea Containers plan to increase revenue, currently around pounds 280m including subsidy, by 35 per cent over the next seven years.

Because the franchise is only for seven years, Sea Containers will not buy any new trains but has committed itself to spending pounds 17m on station improvements. James Sherwood, its chairman, said: "People freeze to death on draughty stations. People don't freeze in the airline business." He suggested new passenger lounges would be provided at many stations.

Great Northern Railway is committed to running the same amount of mileage as the current timetable for the next two years, though some train times may be changed. Extra services to Bradford would be provided as well as new coach links to stations. Mr Sherwood said he would have preferred to have seen privatisation involving the selling of the track and services together rather than separately "because there are three lots of profit being made, for Railtrack, for the train operators, and for the rolling stock companies".

He added that he had spoken to several government ministers about his concerns over the structure of privatisation and "they had said there may be better ways of doing this thing, but the most important thing was to get the railways privatised as quickly as possible".

He said that a privatised railway would inevitably be more efficient, adding: "We have to try to break the communist approach to running a railway started in the socialist period of the 1940s." He said some redundancies were inevitable, but was unable to give a figure and said that he hoped most would be voluntary or early retirements. Asked what a change of government might mean, Mr Sherwood said he was unconcerned: "I think it would be the death of the Labour Party if they started a programme of renationalisation."

Brian Wilson, Labour's transport spokesman, said: "It is extraordinary that a company based in Bermuda in order to avoid paying taxes is being given a licence to print money, funded entirely by nearly pounds 1bn of public investment in the East Coast main line."

Mr Wilson added that under BR, the line had been profitable and that it was only as a result of the changes to the financial structure of the railways that it had lost money in the past two years.

t Police yesterday staged an early morning raid on the Southend offices of the London, Tilbury and Southend line which is the subject of an inquiry into ticket fraud allegations. The alleged fraud resulted in the allocation of the franchise to the management being withdrawn hours before it was due to take place in early February.