spotArguments for socialism




spotAround the UK

All keywords

All Organisations subcategories:


* Commercial

Committee for a Workers International


Labour Party

Left and radical


Nationalist and National Liberation

Pro capitalist and Imperialist


Social Networks

Socialist Party


Trade Union


Voluntary & non-profit

Commercial keywords:

A4e (9)

Agricultural (8)

Amazon (19)

Arriva Rail North (12)

Art (59)

Asda (8)

Atos (12)

BAE (8)

BP (50)

Balfour Beatty (23)

Bombardier (10)

Care UK (9)

City Link (9)

Coca-cola (5)

Conocophillips (6)

Coryton (7)

Crown (12)

DLR (9)

Drug companies (18)

EDF Energy (12)

East Coast mainline (3)

Fannie Mae (1)

Ferries (10)

Finance (46)

First Bus (11)

First Great Western (5)

Freddie Mac (1)

G4s (15)

Gama (5)

Glencore (2)

HSBC (13)

Hovis (11)

ICL Plastics (2)

Jet (6)

Jet (6)

John Lewis (5)

Kone (6)

Lloyds (3)

McDonalds (22)

McDonalds (22)

Media (130)

Medirest (12)

Merseyrail (27)

Mmp (6)

Morrisons (8)

National Express (8)

News International (34)

Northern Rock (34)

Picturehouse (6)

Press (68)

Print (9)

RBS (18)

Rail (307)

Remploy (51)

Retail (59)

Rolls Royce (9)

Rural (7)

Shipbuilding (7)

Shipping (3)

St Mungos (2)

St Mungos Broadway (4)

Tesco (76)

Thera (5)

Trains (71)

Tyneside Safety Glass (5)

Uber (15)

Ucs (1)

Unilever (15)

Virgin (30)

Winterbourne (3)

WorldCom (2)

National Express

Highlight keywords  |Print this articlePrint this article
From: The Socialist issue 587, 7 July 2009: Action now to defend public sector

Search site for keywords: National Express - Rail - Transport - Pay - Privatisation

National Express goes off the rails

THE NEWS that National Express has walked away from its east coast rail franchise comes at a time when most other tocs (train operating companies) are experiencing a drop in revenue due to the recession. Transport secretary Lord Adonis has temporarily nationalised the line prior to a future resale.

Mark Pickersgill

The company will only be exposed to a debt of 72 million even though it negotiated a contract with the Department for Transport to pay back 1.4 billion for the franchise up until 2015. This is because National Express set up a separate company, a special purpose vehicle called 'National Express East Coast', which means that National Express itself will not have to carry any liabilities or face any financial penalties.

The company did offer 100 million rather than the original 72 million but this was turned down by the government on the grounds that it could be construed that a toc could be courting favour!

However it is public money that will be used to cover the shortfall, putting major rail upgrading works at risk - including electrification of the Midland and Great Western main lines.


Under rail privatisation, companies make a bid for a franchise anticipating that revenues will rise, allowing the company to pay back to the government a set amount of money called 'premium payments'. The tocs receive huge government subsidies - 800 million was paid out to the top eight companies last year - so the idea that these companies will pay back the subsidies by way of premium payments looks good for the government's accounts.

In the case of the east coast main line, National Express anticipated an annual increase of 10% in revenue allowing them to pay back 55 million for this year (1.4 billion for the whole eight year contract) but this year the increase in revenue was only 3%, meaning that the company would have to make up the shortfall itself or, as National Express decided to do, hand back the franchise to the government.

Other tocs are also experiencing huge drops in revenue, such as Stagecoach who run South West Trains and have a liability of 1.2 billion. They too may also walk away without being penalised.

Several other companies have the so-called 'cap and collar' arrangement in force and this is used to stop tocs from receiving windfall gains (the cap) while protecting the companies from the severity of recessions (the collar). The arrangement is written into most of the contracts that are awarded to the tocs and comes into force after five years of running a franchise (in the case of National Express the cap and collar clause would not come into effect until 2011).

The cap and collar clause means that the government steps in and pays up to 80% of any fall in projected revenue that the rail franchise incurs and this year the amount of money being paid out by the government to the tocs will be around 500 million.

The rail network costs the taxpayer three times more than it did under publicly-owned British Rail, and fares in Britain are the most expensive in Europe. Privatisation of the railways has allowed big business to extract huge profits from the system while using public money to underwrite any losses.

The government has been forced to step in to save Railtrack and Metronet in the recent past because private enterprise is unwilling and incapable of funding the huge amount of investment required to run a public transport system. The Socialist Party calls for the complete renationalisation of the whole transport system run under democratic workers' control.

Join the Socialist Party
Subscribe to Socialist Party publications
Donate to the Socialist Party
Socialist Party Facebook page
Socialist Party on Twitter
Visit us on Youtube



Phone our national office on 020 8988 8777


Locate your nearest Socialist Party branch Text your name and postcode to 07761 818 206

Regional Socialist Party organisers:

Eastern: 0798 202 1969

East Mids: 0773 797 8057

London: 020 8988 8786

North East: 0784 114 4890

North West 07954 376 096

South East: 020 8988 8777

South West: 07759 796 478

Southern: 07833 681910

Wales: 07935 391 947

West Mids: 02476 555 620

Yorkshire: 0114 264 6551



Alphabetical listing

October 2019

September 2019

August 2019

July 2019

June 2019

May 2019

April 2019

March 2019

February 2019

January 2019