Corporate bungling means the state will run the east coast mainline. It should be left in government hands to better observe the relative merits of public and private ownership
The U-turn is a difficult manoeuvre to perform on rails, but Chris Grayling has managed it. The transport secretary did not look comfortable on Wednesday, informing the House of Commons that the east coast mainline would be brought under government control. He tried to present renationalisation as something other than a 180 degree reversal of previous policy. He emphasised the temporary nature of the measure and underlined his belief in the superiority of private enterprise over state control. It was still a volte-face. The line has been run as a franchise by Stagecoach and Virgin since 2015, but unprofitably. The operators promised to pay £3.3bn to run the line for eight years. Within three, they have breached the terms of their contract. It is a familiar pattern: private providers making unrealistic bids, confident that the government must play backstop if they fail, which they did last year. The challenge then facing the transport secretary was to settle on a form of intervention that was politically acceptable to rail users and ideologically palatable to himself and his party.
The two requirements pulled in opposite directions. A straight bailout would look like a reward for failure, transferring taxpayers’ money to corporate bunglers who should foot the bill for their own incompetence. Mr Grayling has been at pains to point out that the franchise holders are paying a price – in terms of damaged reputation and forfeited cash (around £200m). But he has been equally reluctant to accept that the line might be better off in public hands. This has been an ideological hurdle. Mr Grayling is a dogmatic free-marketeer, allergic to the idea of public sector management in anything that might also be privately run. The east coast mainline conundrum forces him to swallow something he finds intellectually discomfiting: private sector failure invites public ownership as a legitimate alternative.