First privatised rail line is agreed

Rail privatisation: First line moves into private hands as Stagecoach signs contract for South West Trains becomes trap Book locked to grid strap Book locked top grid

The first rail line was privatised last night despite continuing legal confusion and a change in the rules governing the franchise process by the Sir George Young, the Secretary of State for Transport.

Final contracts were signed to hand over control of South West Trains to Stagecoach, Britain's largest bus company, even though a legal challenge, against another of the first three franchises, LTS, was due to be heard today in the Court of Appeal.

Sir George Young showed his determination in bulldozing through privatisation when he announced in Parliament yesterday that he was changing the rules governing the allocation of franchises following last week's Appeal Court decision that the process of drawing up new minimum train timetables had been unlawful for five of the first seven lines. The case rested on the fact that the Government had said that the minimum "passenger service requirements", the minimum level of service to be provided by private operators, had to be "based on" the existing service level.

Yesterday, in his statement, Sir George said that the franchising director, Roger Salmon, would now be required to draw up contracts with private operators to ensure services were "broadly similar" to those operated immediately prior to franchising. There would be a "core service level" that would be protected.

Sir George's statement also said that the franchising director should, "when considering the award of future franchises", take account of bidders commitments and plans to operate more trains than the minimum set in the PSR. It is thought that most of the bidders for the early franchises will in fact operate more trains than the minimum but last night no details had yet emerged of Stagecoach's bid.

While Labour accused the Secretary of State of "fiddling" the guidelines to meet the legal requirements, Sir George's statement appeared to have succeeded in buying off Tory MPs who were threatening to rebel against the Government.

Two of the potential rebels last night welcomed the statement saying they felt it would require the franchising director to provide services which were either as good as or better than those offered at the moment.

"I welcome the minimum requirement to ensure that services at present BR rates are continued," said Tim Rathbone, one of the Tory MPs. He said he was prepared to accept ministers' assurances that it could lead to better services. Sir Keith Speed also welcomed the statement. The Tory MPs are planning to see Sir George today to press for more investment to be guaranteed and one, David Nicholson, MP for Taunton, will raise concerns over service levels.

Campaigners against rail privatisation said the new wording does nothing to allay fears about potential rail cuts. Keith Bill, of the Save Our Railways Campaign, which had brought the successful legal challenge, said: " 'Broadly similar' does not seem to mean anything different from 'based on' and yet on some lines they are putting forward 50 per cent reductions in the number of trains. That's not 'broadly similar'."

Meanwhile, Thurrock council yesterday lost a challenge in the High Court seeking a judicial review on the London, Tilbury and Southend contract, which the Appeal Court found had been drawn up unlawfully but which was allowed through because campaigners had not tabled their legal objection in time. Thurrock is taking its case to appeal today.