After Ed Miliband confirms Labour’s support for allowing DOR to bid for franchises, RDG’s Martin Griffiths warns private sector could be deterred

Labour Party leader Ed Miliband has confirmed that the law would be changed to allow a publicly-owned body to bid for rail franchises if Labour wins the May 2015 general election.

Speaking at Labour’s National Policy Forum in Milton Keynes  last week, Miliband echoed comments from shadow transport secretary Mary Creagh on the rationale for expanding the role of publicly-owned operator of last resort Directly Operated Railways which has run the East Coast business since 2009.

“We know East Coast has worked in public hands,” Milliband said. “So on the basis of value for money, let’s extend that idea. And let the public sector challenge to take on lines.

“Let’s end the situation where you can be a European public rail company and run lines here, but not if you are a public operator from Britain.”

Miliband also indicated that Labour would make wider reforms to the franchising system which he described as “too often putting the profits into the private sector and the risk onto government”.

Speaking ahead of Miliband’s speech, Martin Griffiths, chairman of the Rail Delivery Group and chief executive of Stagecoach said competing against a UK government-owned operator would deter private companies from bidding. “If you start to think it’s not going to be a level playing field then you may stop bidding,” he warned.

Meanwhile, the RDG denied Labour’s claims that private operators had made excess profits. It pointed out that average train company margins are 2.9%.

 

Related coverage can be found inside the latest issue of Passenger Transport:


Structure or privatisation?
Analysis by Oxera for the Rail Delivery Group considers the reasons for record rail growth

TOC profits: could Labour save anything?
Opposition politicians are grappling with the future of the rail industry,  but what could be gained by taking train operations back into state control?

John Nelson: Public versus private isn’t the real issue
Debating whether the railway should be publicly or privately-run misses the point. There are important structural issues to address

 

This article appears inside the latest issue of Passenger Transport.

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