STRUGGLING transport group National Express is to be stripped of its East Anglia rail franchise three years early, the Government said today.
The decision from the Department for Transport (DfT) comes after the company’s East Coast Main Line franchise came under public control earlier this month.
The East Anglia deal could have been extended until 2014 but Transport Secretary Lord Adonis told the firm yesterday that the franchise would end in March 2011.
Lord Adonis said today that the termination of the East Coast franchise represented a ``default'' under the East Anglia franchise.
He added that the process for securing a new operator to run East Anglia would start immediately so a new franchise could begin from April 2011.
Earlier this week the Department for Transport announced a bidding timetable for National Express’s other rail franchise - the London to Tilbury and Southend c2c line - which will change hands in May 2011.
The East Coast line is being run in the public sector for the next two years by a new company - East Coast.
Today Lord Adonis said: "My judgment is that the public interest would not be served by terminating the (East Anglia and c2c) franchises immediately, necessitating state management during the refranchising period and three operators in two years."
Lord Adonis added: ``In determining the future of the c2c and East Anglia franchises, my overriding concern has been to minimise disruption to passengers and staff, and cost to the taxpayer, while ensuring that train companies stand by their commitments.
"I judge these objectives are best served by terminating the East Anglia franchise in 2011, causing them (National Express) to forego three years of profit, and beginning the refranchising process immediately so that a new operator is in place in early 2011."
National Express said that while the East Anglia decision was expected, the company was "disappointed given the excellent improvement in performance delivered by the group over the past five-and-a-half years of operating the franchise".
East Anglia services run out of London's Liverpool Street station to eastern England destinations including Peterborough and Norwich.
National Express’s difficulties in dealing with the recession had been compounded by its East Coast franchise deal whereby the company had to pay £1.4 billion in premiums to the Government over the life of the franchise.
When the company said earlier this year that its funding for East Coast was coming to an end, Lord Adonis announced that the line would be run in the public sector.
National Express’s failure on the East Coast line follows on from the earlier termination of franchise for the line operated by GNER which suffered problems when its parent company, Bermuda-based Sea Containers, ran into financial difficulties.
The GNER and National Express problems have prompted some to question the whole franchise policy.
Bob Crow, general secretary of the Rail Maritime and Transport union said: ``This latest franchise failure underlines the continuing chaos of rail privatisation which is riddled with instability, uncertainty and crisis management.
"We are calling on the government to seize this golden opportunity to take National Express East Anglia back into public ownership, and for the sake of both passengers and staff we are delighted that the company’s days as a train operator are well and truly numbered.
"The sooner they and the rest of the money-grabbing train companies are kicked off our tracks for good, the better."