Major dismisses derailed franchise

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The Independent Online

Transport Correspondent

John Major attempted to shrug off the postponement of a privatised rail franchise amid warnings from City investors that they will expect more stringent scrutiny of bids.

The Prime Minister insisted that the problems which led to the privatisation process for the London, Tilbury and Southend line being halted would not delay the overall privatisation process. The line will now not be privatised until at least June, as the tendering process has to be restarted.

Referring to the LTS ticket fraud allegations which led to the management buyout team losing the franchise only nine hours before it was due to be handed over, Mr Major said: "Someone misbehaved. That happens. It happens in the public sector, it happens in the private sector."

The remarks were seized upon by Labour as signs that the Prime Minister was trying to downplay the seriousness of the matter. John Prescott said on BBC Radio 4's PM programme that Mr Major was "weak on crime and weak on the causes of crime".

While Tories were trying to emphasise that the embarrassing episode was merely a blip in the privatisation process, a City source, with experience of several bids, said: "The management buyout teams are going to face increased scrutiny, such as requests for more financial information and even written guarantees that they have not been involved in any skulduggery." Management buyout teams are lined up to bid for virtually all the 25 lines on offer, the first two of which were privatised last weekend.

Bids for the LTS line are being invited from the three previously shortlisted companies beaten by the management team: two bus companies, which are favourites, Prism and Stagecoach, and a group of rail experts, GB Rail.

The management buyout team, Enterprise Rail, came within nine hours of obtaining the franchise and last night Roger Salmon, the franchising director, suggested that if the ticketing fraud had been revealed after the transfer, it would have been have been allowed to retain the franchise.

Mr Salmon is hoping to have all 25 tenders underway by the end of the year, although this affair has raised questions about the competence of the Office of Passenger Rail Franchising, which he heads.