From
CILT websiteThe boss of FirstGroup has slammed Labour^s ^urge to control^ transport services and ^fixation^ on public sector involvement in rail services, claiming that the state-run East Coast mainline will return more money to the Treasury after it is re-privatised.
First is one of three firms shortlisted to take over the rail line, which has been in public hands since 2009. In that time, more than ^1bn has been paid in premiums by the not-for-profit body that controls it, Directly Operated Railways.
While Labour has said it would not re-privatise East Coast if in power, it is making an election pledge to allow public sector companies to bid for future franchises on a level playing field with private firms.
The winning bidder for East Coast is to be announced this month, with two joint ventures, Stagecoach with Virgin and the largely French state-owned Eurostar with Keolis, also in contention.
First recently lost two major franchises, Scotrail and Thameslink. Chief executive Tim O^Toole said: ^All we can do is bid. We^re in the business of improving returns to our shareholders and we can^t put that at risk simply for the relief of some winning headline. So we have to stick with our discipline and believe that over the next dozen or so franchises we^ll find the right opportunity for us.^
First was widely considered to have overbid for the West Coast mainline in 2012, in the battle with Virgin that sparked the meltdown in the rail franchising system. Since then, First has received direct awards to continue running Great Western, and O^Toole said: ^Getting the extension of FirstGreat Western is a big step forward.^ The award has been controversial, as First now operates the line while paying far less to the government than under its original franchise.
He said franchising was working, and said ^any winning bidder^ on East Coast will be paying higher premiums to the government than the current public sector operator, DOR, via higher rates of growth. O^Toole said of Labour^s plans to allow public sector bidders on future franchises: ^It^s something they are fixated on, and I don^t think it^s going to matter a great deal, but it^s a level of complexity that isn^t going to deliver much.^
O^Toole said a more urgent political issue was the country^s bus services. ^The people who need [them] are people who don^t have cars, need to get to jobs who have to have some social mobility, and it^s making sure that there is support for the bus networks that delivers the other items on the agenda, whether it^s the green agenda or the support of an economy in places other than just London. It^s always the first mode to be neglected and the first one to be talked about in terms of regulation ^ but what we really need is sensible, efficient support for the network across the UK▸ .^
Labour^s Mary Creagh, who held the shadow transport brief until a reshuffle this week, pledged earlier this week to give city and county regions more power to set bus routes and fares. She said: ^Under this Tory-led government, buses have been pushed into a spiral of decline as passengers are priced off the network. Funding has been slashed by 17% in three years, 1,300 routes have been cut, and fares have risen five times faster than wages. Labour will give city and county regions more power over their public transport networks to provide the type of bus service that London takes for granted: fast, frequent, affordable travel and integrated Oyster▸ -card style tickets.^
O^Toole said he was opposed to further regulation outside London, after moves in Tyne and Wear to regulate bus networks. ^The urge for control is irresistible, especially at the time of elections, but any government is going to have to confront the fact that the rollout of a regulated bus network would require enormous subsidies.^
He said London was a special case. ^It is critical to the economy of the UK at large. There^s a reason that London gets a Crossrail and nowhere else does, and people seem to understand that - and it^s the same for the bus network. The issue is, can you afford to take that model elsewhere when you don^t have a need for it? That is the gap in the logic of people talking about more regulation to have a ^London-style system^
He said the north-east^s push for regulation had not driven the big four bus firms^ announcement this week of plans to introduce smartcards that could be used across different operators in cities around Britain. But he said: ^All of us share the view that if you can resolve ticketing issues, a lot of Sturm und Drang over regulated/non-regulated goes away.^
He said customers would end up paying with bank cards on the bus nationwide. ^In the long run, that^s where we^re headed. But there is an appetite for smartcards in a lot of places, so we have to go through that stage. You can^t fight with your customer.^
First this week announced a 2.4% year-on-year increase in operating profits to ^104m for the six months of 2014-2015, although revenues slid by almost ^400m, due to a drop in rail subsidy.
The boss of FirstGroup has slammed Labour^s ^urge to control^ transport services and ^fixation^ on public sector involvement in rail services, claiming that the state-run East Coast mainline will return more money to the Treasury after it is re-privatised.
First is one of three firms shortlisted to take over the rail line, which has been in public hands since 2009. In that time, more than ^1bn has been paid in premiums by the not-for-profit body that controls it, Directly Operated Railways.
While Labour has said it would not re-privatise East Coast if in power, it is making an election pledge to allow public sector companies to bid for future franchises on a level playing field with private firms.
The winning bidder for East Coast is to be announced this month, with two joint ventures, Stagecoach with Virgin and the largely French state-owned Eurostar with Keolis, also in contention.
First recently lost two major franchises, Scotrail and Thameslink. Chief executive Tim O^Toole said: ^All we can do is bid. We^re in the business of improving returns to our shareholders and we can^t put that at risk simply for the relief of some winning headline. So we have to stick with our discipline and believe that over the next dozen or so franchises we^ll find the right opportunity for us.^
First was widely considered to have overbid for the West Coast mainline in 2012, in the battle with Virgin that sparked the meltdown in the rail franchising system. Since then, First has received direct awards to continue running Great Western, and O^Toole said: ^Getting the extension of FirstGreat Western is a big step forward.^ The award has been controversial, as First now operates the line while paying far less to the government than under its original franchise.
He said franchising was working, and said ^any winning bidder^ on East Coast will be paying higher premiums to the government than the current public sector operator, DOR, via higher rates of growth. O^Toole said of Labour^s plans to allow public sector bidders on future franchises: ^It^s something they are fixated on, and I don^t think it^s going to matter a great deal, but it^s a level of complexity that isn^t going to deliver much.^
O^Toole said a more urgent political issue was the country^s bus services. ^The people who need [them] are people who don^t have cars, need to get to jobs who have to have some social mobility, and it^s making sure that there is support for the bus networks that delivers the other items on the agenda, whether it^s the green agenda or the support of an economy in places other than just London. It^s always the first mode to be neglected and the first one to be talked about in terms of regulation ^ but what we really need is sensible, efficient support for the network across the UK.^
Labour^s Mary Creagh, who held the shadow transport brief until a reshuffle this week, pledged earlier this week to give city and county regions more power to set bus routes and fares. She said: ^Under this Tory-led government, buses have been pushed into a spiral of decline as passengers are priced off the network. Funding has been slashed by 17% in three years, 1,300 routes have been cut, and fares have risen five times faster than wages. Labour will give city and county regions more power over their public transport networks to provide the type of bus service that London takes for granted: fast, frequent, affordable travel and integrated Oyster-card style tickets.^
O^Toole said he was opposed to further regulation outside London, after moves in Tyne and Wear to regulate bus networks. ^The urge for control is irresistible, especially at the time of elections, but any government is going to have to confront the fact that the rollout of a regulated bus network would require enormous subsidies.^
He said London was a special case. ^It is critical to the economy of the UK at large. There^s a reason that London gets a Crossrail and nowhere else does, and people seem to understand that - and it^s the same for the bus network. The issue is, can you afford to take that model elsewhere when you don^t have a need for it? That is the gap in the logic of people talking about more regulation to have a ^London-style system^
He said the north-east^s push for regulation had not driven the big four bus firms^ announcement this week of plans to introduce smartcards that could be used across different operators in cities around Britain. But he said: ^All of us share the view that if you can resolve ticketing issues, a lot of Sturm und Drang over regulated/non-regulated goes away.^
He said customers would end up paying with bank cards on the bus nationwide. ^In the long run, that^s where we^re headed. But there is an appetite for smartcards in a lot of places, so we have to go through that stage. You can^t fight with your customer.^
First this week announced a 2.4% year-on-year increase in operating profits to ^104m for the six months of 2014-2015, although revenues slid by almost ^400m, due to a drop in rail subsidy.
