Competition watchdog raises concerns over East Coast sell off

Government plans to sell off the successful and publicly owned East Coast main line to the private sector have run into problems after concerns were raised by the Competition and Markets Authority (CMA). Action for Rail are calling for the rushed sell-off of the line to be delayed to allow an in-depth competition inquiry.

The CMA has said that competition could be reduced on sections of the East Coast main line, in the East Midlands as well as in Scotland. The government awarded the East Coast franchise to Inter City Railways Ltd (ICRL), a joint venture of private train operators Stagecoach and Virgin, in December 2014.

The CMA report found that there is “a realistic prospect that the award of the East Coast franchise to ICRL would lead to higher fares or reduced service quality for rail passengers travelling on these overlapping routes.”

Stagecoach already operate services on sections of the East Coast line via their subsidiary East Midlands Trains, between Peterborough and Grantham and between Peterborough and Lincoln. The CMA identified a further overlap of East Coast rail services with Citylink coach services (owned by Stagecoach), between Edinburgh and Dundee, as well as between Edinburgh and Aberdeen.

Since being under public ownership in 2009 (after private operators GNER and NXEC failed to deliver), East Coast has returned over £1bn to the Treasury and won 35 industry awards. Profits are up on last year by £2.5m, and the Spring or Autumn?? Passenger Focus Survey 2014 found that 90 per cent of respondents were satisfied or felt that the service was good.

Despite the success of the line, the government rushed ahead with the sale – taking 16 months instead of the recommended 24 – so that it could be completed before the general election in May. The rushed sale exposes the shallow politics behind the decision. ICRL now has an opportunity to offer undertakings to resolve the competition concerns identified by the CMA within five working days, while the CMA has until 20 February to decide whether these might be acceptable.

Action for Rail has run a long-standing campaign to prevent the sell-off of the line and these new concerns by CMA add weight to our efforts to call into question the sale as well as the rushed timescale in which it took place. We are calling for the sale of the East Coast line to be delayed pending an in-depth competition inquiry.

See recent article in the Guardian for further information – “Competition watchdog raises concerns over East Coast rail privatisation”, The Guardian, 7 February 2014.