Page last updated at 17:48 GMT, Monday, 16 November 2009

Adonis blasts franchise decision

By BBC Inside Out
BBC East

Lord Adonis
Lord Adonis said the firm did not manage the bidding process well

Transport Secretary Lord Adonis has said it is "unacceptable" for National Express to continue operating other franchises after giving up the East Coast Main Line.

The government took over the East Coast line on Saturday when cash-strapped National Express gave up the franchise.

The firm also runs the East Anglia franchise as well as services on c2c, the London to Tilbury and Southend line.

Rail unions have called for the company to be stripped of these two franchises.

National Express said it "continued to meet all its contractual obligations for the East Anglia and c2c franchises".

'Impact of recession'

A spokesman said: "At East Anglia we have improved punctuality from 85% to 91% since the start of the franchise in April 2004."

The company also said it had agreed a £155m deal to introduce 188 new trains and additional carriages on the East Anglia network over the next two years.

In a further statement National Express said: "It has been recognised by all parties, including the Department for Transport, that the challenges… were brought about by the recession."

It said East Coast was named as the UK's most improved train operating company by the Office of Rail Regulation.

The government assumed when the contract was signed that if National Express defaulted on one franchise they also defaulted on the other two.

This was called a "cross default".

"Our legal advice tells us that the Department for Transport will not be able to exercise the cross default," National Express has now said.

But in an interview with BBC Inside Out, Lord Adonis said: "I regard it as unacceptable and not the way to treat the government that they seek to give up on their loss-making franchise... but keep the ones that are profitable."

National Express says it is meeting all its contractual obligations

The company has been struggling with the East Coast franchise since it was revealed that the amount it had agreed to pay to run services on the line was too much.

National Express agreed in 2007 to pay £1.4bn over seven years to run the line.

It announced in July that "due to the unprecedented impact of the recession" it would be seeking the early hand back of the franchise.

However, Lord Adonis said: "National Express clearly didn't manage the bidding process well.

"By their own point of view they bid at a level that they felt they could not sustain thereafter - that appears to be the fundamental reason why the franchise hasn't worked for them."

The East Coast franchise is expected to stay in government hands until 2011 when there is likely to be a fresh auction.

The Inside Out programme can be seen on BBC1 at 1930 GMT on Monday 16 November.

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