Sea Containers pulls out of rail bids
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Transport Correspondent
One of the biggest private companies bidding for rail franchises yesterday abandoned its attempt to run one of the lines, amid sharp criticism that privatisation would not help bring investment to the "deteriorating rail network".
Sea Containers, which owns Hoverspeed and runs the Orient Express, was also critical of the way that the bidding process appears to favour existing rail managers in management buyout teams, rather than genuine outside private companies who would bring about a significant change in corporate culture.
The company was unsuccessful in its attempt to obtain franchises for two of the first lines on the market, Great Western Railway and South West Trains. It had been expected to maintain its interest in subsequent contests but yesterday it pulled out of the whole process.
James Sherwood, president of the Bermuda-based company, said that the Government had refused to offer franchise periods long enough to justify capital investment and without such investment the company can only see a deteriorating rail network, an environment in which it would not wish to operate.
Mr Sherwood added: "The Government really only wants the network to be managed for the primary benefit of Railtrack and the rolling stock companies, which are being sold off to private investors."
Nearly all the parts of BR that have been privatised so far have gone to management buyout teams, including two of the three rolling stock companies, the on-board catering supplier and Red Star parcels.
Of the first three rail franchises, which are due to be allocated by the end of the year, one of them, LTS, is certain to go to the management since it is the sole bidder, and management teams are also favourites in the other two. Private companies bidding for parts of the network are worried that the inside knowledge of the existing rail management means that outside bidders have virtually no chance of successfully competing against them.
A source close to Sea Containers said: "The Government said that one of the key aims of privatisation was to bring in new blood, but this does not seem to be happening."
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