The House of Commons Public Accounts Committee concluded in April 2018 that overly optimistic passenger forecasts were to blame for the collapse of the East Coast mainline franchise.
The franchise’s repeated collapse highlights two key flaws with Britain’s rail model: it incentivises overestimating to win bids, and the government ultimately holds all the risk. Since transport plays too vital a role in keeping the economy going and all of us moving, the government cannot allow the railways to stop running.
The Franchise holder is taking a certain amount of risk, no? They’ve agreed to make payments, passenger numbers don’t turn up, they still have to pay.
Yes, they do. Stagecoach and Virgin are taking a thumping loss on the East Coast line. They’re being let out of future losses because Network Rail, the government owned bit, has fucked up over upgrades.