Monday, November 6, 2006 at 11:22 am

British Rail Franchising Questioned

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In the 1990s the British government privatized British Rail, replacing it with a franchise system, whereby private companies would bid for the right to offer rail services, paying the government a fee for the right to do so. Controversial at the time, and it remains so (at one point the safety record of the companies came into question).

GNER at King's Cross But now a Commons committee is questioning the whole premise of the franchise system, calling it muddled and fundamentally flawed (BBC News, Guardian). The government underwrites the losses if a company walks away from the table, and passengers are on the hook for fare increases if a company overbids for a service and then has to find a way to recoup its losses — which is the situation with GNER, which paid £1.3 billion for the right to operate trains in its region (northeastern England, London to Edinburgh), but which also filed for bankruptcy last month.

Photo of the GNER at King’s Cross by Alan D.

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