East Coast franchise – direct award to LNER until 2025

JaJaWa

Established Member
Joined
14 Feb 2013
Messages
1,252
Location
Kowloon / St. Albans
LNER will become the longest operator of InterCity East Coast since GNER.

GNER: 11½ years
National Express East Coast: 2 years
East Coast: 5½ years
Virgin Trains East Coast: 3 years
LNER: 7 years

Nationalisation of East Coast mainline extended until 2025
By Scott Challinor

According to filings made with European authorities, the Department for Transport has extended the nationalisation of the East Coast mainline by up to five years, keeping it in public hands until 2025 before a full takeover is finalised.

This comes in spite of Transport Secretary Chris Grayling initially saying that government control would be a “temporary” measure, with the state to oversee the franchise until a new public or private partnership would then assume control in 2020.

The line was nationalised for the third time since 2007 back in June 2018 after it suffered around £200 million in losses under the jurisdiction of Stagecoach and Virgin.

The recently uncovered filings show that the DfT has given the so-called Operator of Last Resort for the railway line an extension until mid-2025 before it assumes full control.

The current Operator of Last Resort is an arm of the London North Eastern Railway [LNER] brand.

Meanwhile, former head of British Airways Keith Williams is conducting a thorough review of the railways on behalf of the government and has said that the industry’s current business model simply “cannot continue” in its current fashion.

Speaking on the extension, a DfT spokesman said: “The current contract with LNER expires on June 28 2020. This update notifies the market that our intention is to enter into a new direct award contract with LNER.

"This will ensure a smooth transition for passengers and staff into the East Coast Partnership and means the recommendations of the Williams Rail Review can be implemented as quickly as possible.”

The extension granted by the DfT to LNER is the first of its kind. No contract extension, officially known as a “direct award prior information notice” has ever been handed out when the line has been under public control in the past.

The East Coast mainline was first privately awarded to Great North Eastern Railway [GNER] in 1996 following the abolition of British Rail under the Major administration. GNER went on to lose the franchise to re-nationalisation in 2007 amid financial issues.

National Express were the next to assume control before the government took it back in 2009. Stagecoach and Virgin then took over in 2015 before it was nationalised for the third time last year.
https://www.theparliamentaryreview....on-of-east-coast-mainline-extended-until-2025
 
Sponsor Post - registered members do not see these adverts; click here to register, or click here to log in
R

RailUK Forums

Bletchleyite

Veteran Member
Joined
20 Oct 2014
Messages
54,322
Location
Up and down the south WCML (mostly)
Well there goes any incentive to improve the ECML for 5 years.
Or there goes with a stable, punctual and reliable ECML for 5 years. The continuing VTWC Direct Awards have meant that, the "via Birmingham" changes aside, nobody has seen fit to prat about with something that is actually working quite well, to the extent that anything ever does on the railway.

If it's by and large satisfying passengers and it's turning a profit to Government coffers, why prat with it unnecessarily?

FWIW, if they announced a 5 year Direct Award to Virgin Rail Group on the WCML I think passengers would be quite happy. Passengers by and large didn't want it pratting with last time and were relieved when "First Horizon Trains" (utterly silly name) disappeared off over the, er, horizon.
 

700007

Member
Joined
6 May 2017
Messages
1,088
Location
Near a bunch of sheds that aren't 66s.
Well there goes any incentive to improve the ECML for 5 years.
LNER is in the process of introducing new Azuma trains and will be rolling out a new timetable next (?) year going to several new destinations around the East Coast. Improvements are happening as we speak and will happen over the next few years. Should take us to 2025 and then there is reason to introduce a new tender.
 

LNW-GW Joint

Veteran Member
Joined
22 Feb 2011
Messages
14,373
Location
Mold, Clwyd
So they illustrate the piece with a picture of a class 373 Eurostar on HS1!

DfT probably had to make some kind of statement about LNER under EU contract rules, and have given themselves an extra 5 years.
I don't think it means very much, because they could restart the franchise process at any time.
The OLR status of LNER is not a franchise or direct award, but does need some kind of service agreement to cover its operation.
I'd be more impressed if this was a proper public announcement.
It just kicks the can down the road beyond the outcome of the Williams review (and the reorganisation of Network Rail).
The target operation is supposed to be the "East Coast Partnership".
 

JaJaWa

Established Member
Joined
14 Feb 2013
Messages
1,252
Location
Kowloon / St. Albans
DfT probably had to make some kind of statement about LNER under EU contract rules, and have given themselves an extra 5 years.
I don't think it means very much, because they could restart the franchise process at any time.
The OLR status of LNER is not a franchise or direct award, but does need some kind of service agreement to cover its operation.
I'd be more impressed if this was a proper public announcement.
It just kicks the can down the road beyond the outcome of the Williams review.
Maybe currently but...
Speaking on the extension, a DfT spokesman said: “The current contract with LNER expires on June 28 2020. This update notifies the market that our intention is to enter into a new direct award contract with LNER.”
 

800002

Member
Joined
19 Jun 2019
Messages
655
I would have thought a five year direct award was better than what XC got, as there is a clear development timeline in place on the east coast which sensibly (in my own opinion) now has continuity in its operator and whom can now see through the implementation / glitch fixing / development on the projects that it inherited from the previous operator.
They have now been given some responsibility to ensure things progress, surely, as unlike XC who can potentially sit back and simply tinker with the overall product, as they haven't been given sufficient time to fully implement anything significant.
That's my thought anyway.
 

yorksrob

Veteran Member
Joined
6 Aug 2009
Messages
23,846
Location
Yorks
Looking through the fares for a couple of months hence, they still seem to be persisting with VTEC's uninspiring pricing model.
 

AndrewNewens

Member
Joined
24 Jun 2011
Messages
51
My understanding is that LNER is run by an 'operator of last resort' so, unlike when East Coast was run by a government company (Directy Operated Railways Ltd I think), it is still technically run by a private company. Can anyone confirm this and name the mystery company that runs LNER on a day to day basis?
 

Jorge Da Silva

Established Member
Joined
4 Apr 2018
Messages
2,095
Location
Cleethorpes, North East Lincolnshire
My understanding is that LNER is run by an 'operator of last resort' so, unlike when East Coast was run by a government company (Directy Operated Railways Ltd I think), it is still technically run by a private company. Can anyone confirm this and name the mystery company that runs LNER on a day to day basis?
DfT OLR Holdings Limited (DOHL)

Formed of Arun Group, Ernest & Young and SNC-Lavalin Rail Transit
 

AndrewNewens

Member
Joined
24 Jun 2011
Messages
51
DfT OLR Holdings Limited (DOHL)

Formed of Arun Group, Ernest & Young and SNC-Lavalin Rail Transit
Thanks. So is it effectively still being run by a 'private' company. SNC-Lavalin are a private company as are the rest of the companies mentioned. How are they paid for running the trains?
 

Jorge Da Silva

Established Member
Joined
4 Apr 2018
Messages
2,095
Location
Cleethorpes, North East Lincolnshire
Thanks. So is it effectively still being run by a 'private' company. SNC-Lavalin are a private company as are the rest of the companies mentioned. How are they paid for running the trains?
Effectively the dft appoints this companies to operate the service on their behalf instead of it being directly operated by the DfT.
 

AndrewNewens

Member
Joined
24 Jun 2011
Messages
51
You are dripping us fascinating snippits of information here Jorge. How are their fees negotiated and do we now how much more (or less) do they get than if the service was run as a concession?
 

Jorge Da Silva

Established Member
Joined
4 Apr 2018
Messages
2,095
Location
Cleethorpes, North East Lincolnshire
You are dripping us fascinating snippits of information here Jorge. How are their fees negotiated and do we now how much more (or less) do they get than if the service was run as a concession?
I do not know I do not work for LNER. This information I know is very easy to find. I would imagine it would be similar to concession i.e. they get paid a fee for operating the service depending on the performance.
 

AndrewNewens

Member
Joined
24 Jun 2011
Messages
51
I do not know I do not work for LNER. This information I know is very easy to find. I would imagine it would be similar to concession i.e. they get paid a fee for operating the service depending on the performance.
I'm not so sure about easy to find. I found a link to a FOI request about the issue and the contract that was released was only a couple of pages long and included no figures whatsoever.
 

LNW-GW Joint

Veteran Member
Joined
22 Feb 2011
Messages
14,373
Location
Mold, Clwyd
You are dripping us fascinating snippits of information here Jorge. How are their fees negotiated and do we now how much more (or less) do they get than if the service was run as a concession?
The Operator of Last Resort function was advertised by the DfT after the DOR period at East Coast, and before the VTEC debacle.
The aim is to step in to manage problematic rail franchises, and is mandated by the Railways Act.
The tender was won by the consortium of consultants noted above, with SNC Lavelin (a Canadian engineering consultancy) taking the lead.
They were therefore appointed ("mobilised") by the DfT after VTEC collapsed, under what is effectively a management contract.
The OLR person running LNER used to be a senior Network Rail director, and has wide rail experience.
They will earn high fees for the work, which is regulated by a service agreement with the DfT.
I have no idea what the financial arrangements are or what targets LNER is charged with.

This is not that different from how Directly Operated Railways was formed, using external consultants.
 

Jorge Da Silva

Established Member
Joined
4 Apr 2018
Messages
2,095
Location
Cleethorpes, North East Lincolnshire
https://www.independent.co.uk/news/...ain-franchises-to-private-firms-a6818436.html

Article from when Directly Operated Railways was folded and changed to OLR

The engineer Arup and big four accountancy firm EY have been asked to help the Government set up and operate emergency rail franchises in the event of a repeat of the East Coast mainline fiasco.

This “last resort” function was previously managed by the state, and the shadow transport secretary Lilian Greenwood told The Independent that the changes have led to “the absurd situation of contracting out our in-house operator capacity”.
Directly Operated Railways (DOR) was set up by the Department for Transport (DfT) to manage East Coast in 2009, because National Express was making huge losses on running the franchise. East Coast was privatised again last March, even though DOR received high customer satisfaction scores from passengers. Stagecoach and Virgin Trains now operate the line.
DOR has prepared contingency plans for other franchises should they fail, and it was given the “statutory obligation to provide operator of last resort capability”. It also acts as a second bidder when only one train firm pitches for a franchise, to make sure there is a benchmark against which to judge that tender.

But, unnoticed in DOR’s last annual report, there was a hint it would be wound down once the East Coast franchise was back in private hands. The report stated: “It is planned that following the completion of its programme of work supporting the DfT’s Direct Award Programme, the business will be paused and the trading activities will be significantly reduced.”

A DfT source confirmed that Arup and EY, alongside the rail technology company Interfleet, which has just been rebranded SNC-Lavalin Rail & Transit, were selected to take over many of its functions last month. The source said the consortium would provide “expert support when required” and added: “[The] remit includes monitoring the contractual health of our franchise agreements, as well as providing a stand-by service on a retainer basis to enable us to mobilise and operate a franchise if required.”

Labour claimed this is a “significant change” to government policy, citing comments by former rail minister Simon Burns in 2013 that “the operation of train services by DOR is an essential part of the privatised franchising model”.

Ms Greenwood said: “Ministers are reducing their options for reforming the railways and undermining their own bargaining position. Directly Operated Railways delivered record passenger satisfaction and punctuality, and the chronic instability in the franchising programme over recent years just underlines the need for an alternative operator that would be best provided by the public sector. A private provider with rail experience will surely also be bidding for other contracts, creating conflicts of interest.”

A DfT spokeswoman said: “Directly Operated Railways was set up to manage the East Coast franchise when the previous operator was unable to fulfil its commitments. Following the successful award of the franchise to Virgin East Coast last year, it was not a good use of taxpayers’ money to maintain its full corporate structure ‘just in case’. DOR’s operations were therefore scaled back and brought in-house within the Department for Transport.”

She added: “There is no change to the legal requirement for the Government to ensure the continued running of the railway when a franchise is unable to operate.”
So technically it is operated by private companies but managed by the DfT. I am surprised Jeremy Corbyn has not picked up on this.
 

Starmill

Veteran Member
Associate Staff
Events Co-ordinator
Joined
18 May 2012
Messages
14,981
Location
Manchester
If it's by and large satisfying passengers and it's turning a profit to Government coffers, why prat with it unnecessarily?
Because a significant upgrade program was begun years ago, with new services promised, some infrastructure upgrades and the introduction of a much larger fleet of new rolling stock?

Continuing to do the same as now is, er, not an option...
 

Top