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INFORMED SOURCES June 2000

BIDWATCH

Phew, ‘Bonkers' Orr-Watt back yet again. If I had known how much work Bidwatch involved I would have thought twice about taking on the task of reporting the doings of those wild and whacky guys at Shadow Rail. (All right Roddy, I'll buy it, what's this Shadow Rail RF). It's a joke Roger, you'll have to work it out for yourself.

Anyway, Roger's been at his insufferable worst since the SSRA's decision on the East Coast Main Line franchise replacement. He's been wandering around waving a copy of the April Informed Sources in which the old cynic showed how Sir Humphrey would kick Virgin's proposals for a new high speed rail link paralleling the ECML into touch.

Yes, he got it right. Franchising Director Mike Grant now reckons that ‘there looks to be a case for developing the concept of a new High Speed Line to link London and the Home Counties with major centres leading north to Scotland '. And in addition to the Virgin scheme the SSRA says it has received other proposals for high speed lines, including one from the ECML into the Pennines .

So, Sir Humphrey Grant has concluded that further study is needed to establish the timing for a high speed line and the best route. Anyway, once the alignment has been defined it might not match the ECML franchise. And on top of that the need to increase passenger and freight services on the ECML between now and 2010 must be given priority by the successful franchisee. And anyway the SSRA doesn't believe that the line could be built by 2010

So Sea Containers and Virgin have been asked to ‘formulate their (probably different) thoughts for high speed enhancements to the capacity of the ECML beyond 2010'. I like that ‘probably different' given that Captain Ciabatta and his team at GNER were telling me that the Virgin idea was loopy. Which could make it fun, should (as seems likely) Sea Containers retain the franchise when they will have to be an active participant in an SSRA-led, Railtrack-supported study of the alternative prospects for a High Speed Line to link London and the North early in the next decade.

So there you go. When the SSRA Chairman said, appropos the Virgin scheme ‘more of the same is not enough', we all rushed away excited and didn't hear the concluding part of the sentence ‘but it's all you are going to get while we turn it into our idea'.

New entrants

But before Virgin learned that the worst thing you can do with a better mousetrap is shout about it, we had the qualification list for the Batch 2 franchises.

And it really got my team at Rail Index, the spread betting firm, interested. Nine companies are in the frame for the new Trans Pennine franchise, which should produce some original thinking, and six for South West Trains with some really wild wild cards.

Connex were chuffed because the arrival of Group 4 means that they would no longer be the comedians' railway operator of choice. Several papers ran variations on ‘Sorry madam we have lost your husband'.

Nederlandse Spoorwegen has to be the rank outsider. I mean, how can you let a state railway that can't go bust compete against private firms with shareholders. On the other hand the third newcomer Serco, is the star in my New Railway Investment International, Industry Sector ISA and know all about running main line trains and metros.

Group 4, new to the rail business, said it did have experience in raising private finance and the transfer of people. The SSRA warned that in the absence of a record in railway management ‘the onus on Group 4 was to come up with good solid proposals as to how they can improve customer service'. How about connecting prison vans at main stations? Boom, boom

SSRA Batch 2

As you can see, from the Table the SSRA is now into multiple choice franchising. My suggestion to City Index' customers is to consider the football pools where you perm any two from the combinations of bidders and franchise options.

Central uncertainty

Clearly this uncertainty hit Central Trains hard.. Only incumbent National Express and Group 4 were interested and I reckon NEG were only being polite.

I mean, what are you bidding for? The services to the West could end up in TaffRail, the Centro services could be a separate franchise controlled by the West Midlands Regional Council.

Following a refresher course at the Department of the Blindingly Obvious, University of Effingham , the SSRA warned that any proposals from Group 4 will have to be ‘competitive' with NEG. Sounds sensible.

And if not? ‘If Group 4 does not come up to scratch, NEG will have the task of persuading us that its proposed development of the franchise merits the longer term. We will set them a tough exam' blustered Franchising Director Mike Grant.

Prism suffers

Meanwhile there is now another downside of the ‘tell us what you'd really really like' approach to franchise replacement . The resulting uncertainty caused a potential buyer for Prism Rail (my muckers in the square mile reckon Arriva) to drop out.

This was a bit of a bummer for the SSRA as they were looking to get a seriously strong balance sheet behind the second tier busmen and their four franchises.

Prism even blamed their delayed status as fat cats on the ‘nebulous' franchise replacement programme. So the Franchising Director has agreed to enter into negotiations on the restructuring of the existing Prism portfolio, with the aim of ‘unlocking his franchise replacement options'.

Three areas under negotiation are

*The creation of a WalesRail franchise which would require the early termination of Prism's poorest performing franchises – Wales & West and Cardiff Railways.

*'Upgrading' the existing LTS Rail to meet the performance and service quality targets ‘envisaged by the new franchise replacement agreement'

*Restructuring of the WAGN franchise to facilitate Thameslink 2000. In this case the key decision is the compensation to be paid for early termination.

This looks more like dismemberment than renegotiation. It should be fun seeing how much more subsidy Prism will need if they are to accept a more rigorous performance regime for the 15 year LTS Rail.

Prism ought to be well placed on a WalesRail franchise where they have made the running but, if ECML is anything to go by, are now likely to see their whizzo scheme put out to competitive tender. And Lord knows what will happen on Thameslink 2006 (and counting). Must go