Private rail firms given guarantee of monopolies

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The Independent Online
THERE WILL be virtually no competition between rival rail operators for at least five years after privatisation, ministers have conceded.

Commuter and regional rail services will be franchised off as monopolies and even private operators bidding to take on InterCity services will in most cases be guaranteed exclusivity.

This emerged yesterday as the Department of Transport published detailed proposals setting out how private operators will gain access to the rail network and the basis on which they will be charged.

The document says 'to the extent that it is necessary to ensure the success of the first generation of franchises, on-track competition between operators of passenger services may have to be moderated for a limited and specified period'.

Open access - the system whereby rival operators will be allowed to offer competing services on the same track - will not be introduced until a later stage.

Last week the Government announced that seven lines accounting for one-third of British Rail's pounds 2.1bn passenger income would be the first to be offered for franchise. They include InterCity's East Coast main line from London to Scotland, the Great Western main line from Paddington, Network SouthEast's south western division, the Victoria-Gatwick express and the whole of Scotrail.

The typical length of franchises has been suggested as five to seven years, although in some cases they may last as long as 15 years.

Roger Freeman, transport minister, said yesterday that it would not be possible to have competition on commuter services such as Network SouthEast because there was not enough capacity at peak times to run rival trains.

Mr Freeman also hinted that the Government would oblige franchisees on Network SouthEast to accept travelcards and tickets issued by BR or other private operators. 'There may be circumstances where this is made mandatory,' he said.

Under the proposals, published yesterday, Railtrack, the government body which will take over the ownership and management of the rail infrastructure from BR, will levy charges to cover running costs and investment. The organisation will have to achieve a set rate of return, probably 8 per cent.

Where private operators cannot meet the charges, these will be met through a subsidy paid by a government-appointed franchising director who will be responsible for awarding passenger franchises and monitoring the quality of service standards.

The first franchises will be awarded in the spring of next year and will later form part of the 1994 national rail timetable.

The charging proposals received a lukewarm response yesterday from companies which have already announced an interest in operating rail services.

Sea Containers, the transport company run by James Sherwood, said it was concerned that it might be difficult to operate profitably with Railtrack having control over such an important element of a franchisee's operations. 'Either it will have to operate in a very commercial manner or the franchisees should be allowed to manage and run the rail infrastructure,' a spokesman said.

Richard Branson's Virgin group, which would like to just operate non-stop InterCity services to Edinburgh and Newcastle, said: 'We do not believe we could take on any of the franchises offered by the Government on our own.'