Politicians have criticised transport group National Express for making £500 million from running its rail operations despite receiving £2.5 billion in public subsidy.
The Edgbaston-based firm, which has refused to fund the loss-making East Coast Main Line beyond the next few months, had “ripped off” the taxpayer, Labour MP John McDonnell said in a Westminster Hall debate. He attacked the level of subsidy received by the firm, which he said had axed 750 staff.
Mr McDonnell said: “National Express have taken this Government literally for a ride. They have made £500 million profits out of a £2.5 billion public subsidy. They have increased the fares this year – regulated six per cent, unregulated 7.4 per cent. On the East Coast and the East Anglia line they have laid off 750 workers. Can’t we get the message? We are being ripped off.”
MPs demanded that the East Coast Main Line – from London to Scotland – be run by the public sector for up to 15 years to act as a “comparator” with the rest of the privately-run rail network.
The line is set to be taken over by the Government as National Express’s funding is expected to run out this year. It will be the second time the line has lost a private operator after GNER collapsed in 2006.
Earlier this month transport secretary Lord Adonis set up a public organisation which will operate the line and it will then be re-franchised again within 18 months.
However, Peterborough Tory MP Stewart Jackson called on the Government to move quickly to put it out to the private sector “as soon as possible”.
He added: “We need more institutional disruption in Network Rail like we need a hole in the head. Leave well alone.”
Junior transport minister Chris Mole said the Government had delivered “substantial and sustained” investment in the railways.
Punctuality had improved on the line since National Express took over. Daily punctuality levels were now frequently above 90 per cent and there had been “tremendous innovation” on the route with the introduction of WiFi to the inter-city fleet. He added: “None of us takes any pleasure in the failure of a business or of a company’s inability to fulfil its contract to the Government.”
Bob Crow, general secretary of the rail union RMT, said: “It’s now two weeks since the Government announced that they would be taking decisive action over National Express on the East Coast and we are stepping up the pressure for the company to be dumped as a matter of urgency and for their franchises to be nationalised on a permanent basis, not as a short-term, crisis measure.
“National Express have been taking us all for a ride.”
A National Express spokesperson said: "The Group tried to achieve a settlement that was in the best interests of all stakeholders but following discussions with the DfT, it was not possible to reach a solution.
"We continue to meet and exceed our franchise commitments and have made significant improvements in the service. The business is expected to lose £20million in the first half year, and we will the continue to run the franchise until the committed resources have been used, as per the DfT's franchise model.
"National Express East Coast has made great improvements in train punctuality and customer service, which have been greeted by a 44 per cent drop in customer complaints in 2008. Only last month we were recognised by the independent passenger watchdog Passenger Focus, which rated overall satisfaction with our trains and stations joint top of all the long distance operators."