Incompetent, greedy rail firms face 'renationalisation'

Britain's rail chief warned yesterday that excessive profits by train companies would be confiscated and incompetence exposed through spot checks. Industry sources have described the initiative as "renationalisation".

Announcing a new highly centralised regime for policing train operators, Richard Bowker, chairman and chief executive of the Strategic Rail Authority (SRA), tore into the "uncontrolled and haphazard" approach that had governed the industry so far under the Labour government.

A senior industry source said the statement amounted to "a recognition by the state that privatisation has failed. From now on any significant investment in the industry will be undertaken by the state or underwritten by it." The Government was now back in control, he said.

Mr Bowker rejected the assertion, but indicated his belief that taxpayers had been "ripped off" and that the SRA needed to get a grip on the industry. He warned that in future the authority would exercise its right to take over franchises where operators did not measure up. Other companies would then be invited to bid for the licence.

To make sure train operators delivered what they promised during franchise applications, he said the SRA would employ "mystery shoppers" to evaluate their services.

"We are not going to create a bunch of brown-Macintoshed government inspectors who go out ticking boxes. This is not rocket science, but we will need to have some process for checking and auditing.

"If we need to step in, take over and re-let the franchise to someone else, we shall. We will use the ultimate sanction if we need to."

An important element of the new "passenger-centred" policy will be a set of performance indicators which are expected to include train and station cleanliness, passenger information and ticketing systems and the personal security of passengers.

Under the new system which will begin to operate next year, Mr Bowker, a former director of Virgin Trains, said the authority would share the burden in hard times, but would expect to cream off some of the benefits when profits were excessive so that the money could be directed back into the industry.

The new approach follows detailed consultations between Mr Bowker and Alistair Darling, the Secretary of State for Transport, who is insisting on "clean stations and punctual trains" by the time of the next election.

Mr Bowker said he believed the private-sector train operators should still carry much of the risk but there had been a lack of clarity under the existing regime. "We want reliable services delivered by a stable industry in which operators want to operate and investors want to invest," he said.

The new Franchise Policy Statement amounted to a brutal denunciation of the SRA under its previous chairman Sir Alastair Morton, who Mr Bowker believes allowed the industry to run riot.

The influential industry source pointed out that Railtrack had handed over responsibility for the infrastructure to the state-backed organisation Network Rail and all major projects were now the responsibility of the SRA. "Yesterday's announcement completes the renationalisation of the railways," said the industry source.

The Rail Passengers Council said the policy announcement was "an important step in the right direction".

Mr Darling said the new regime would be better for the passengers.

George Muir, the director general of the Association of Train Operating Companies, welcomed the SRA's establishment of a "methodical programme of franchising, based on clear principles".