Rail sell-off rolls on despite legal setback

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The Independent Online

Transport Correspondent

Anti-rail privatisation campaigners yesterday won a partial victory in the Court of Appeal over rail cuts, but failed to delay progress in selling off rail services.

Barring success in a last-minute application to the House of Lords on Monday by the campaigners, the names of the winning bidders for the first three lines are expected to be announced on Tuesday.

Yet the judges, in what Sir Thomas Bingham, Master of the Rolls, called "a very anxious and difficult case", ruled that there were serious errors in the way the franchise process had been conducted. In particular, Roger Salmon, the franchising director, had failed to comply with instructions from the Secretary of State for Transport in setting minimum service levels well below the number of trains in the existing timetable.

In a confusing judgment, the three judges are allowing the franchise process to continue without delay. In considering the minimum service levels - known as passenger service requirements (PSRs) - for the first three lines, the judges said that two of them - South West Trains and Great Western Trains - had been drawn up lawfully, but for the third, London, Tilbury and Southend, Mr Salmon had wrongly set the levels of service too low.

He had also wrongly allowed too many potential cuts in agreements for the next four lines due to be privatised, Gatwick Express, Midland Main Line, Network SouthCentral and InterCity East Coast.

But because the judges ruled that the application to challenge the first three franchises, by the Save our Railways campaign, had been submitted too late, the LTS bid could proceed. LTS and Great Western have been won by management buy-out teams, while the third, South West Trains, is expected to go to Stagecoach, Britain's largest bus company.

The judgment was greeted by Keith Bill, of Save Our Railways, as "a major blow against privatisation which will save 10,000 trains across the network", a figure Mr Bill later increased to 20,000 trains. But the ruling is likely to be less significant than campaigners hoped. A senior City lawyer said: "The bidders probably based their bids on the existing timetable anyway, which means they were not materially affected."

Mr Salmon will now have to work out how to comply with the judgment. He had previously argued that he wanted lower PSRs than in the existing timetable as potential bidders would then ask for less subsidy than if they were forced to run services exactly as set out in the timetable. Now he will either have to pay out more to the bidders, or get the rules changed.

Mr Salmon's office said: "There are several options. The Transport Secretary could issue new instructions, or we could appeal to the House of Lords."

Although preliminary bids for the group of four franchises were submitted last week, the full tenders are not expected until 18 March.

Mr Salmon is confident that he will not have to restart the whole process by drawing up new PSRs.