National Express loses control of London-to-Edinburgh route as chief excutive resigns

The government has announced that it plans to nationalise the East Coast rail service, after refusing to bail out the struggling rail operator National Express.

The troubled company was forced to abandon the franchise after it failed to renegotiate its £1.4bn contract with the government.

The news came as National Express announced that its chief executive Richard Bowker, who oversaw the purchase of the service, has resigned.

The London-to-Edinburgh route will now be taken into public ownership when National Express's funding runs out later this year. It will remain in public hands for at least a year before the franchise is put out to tender.

Speaking earlier today, the Transport Secretary Lord Adonis said: “The government is not prepared to renegotiate rail franchises, because I'm simply not prepared to bail out companies that are unable to meet their commitments.

“It is simply unacceptable to reap the benefits of contracts when times are good, only to walk away from them when times become more challenging.”

He added that it was now "possible" that the government could also take over National Express’s two other rail franchises-East Anglia and the c2c London-to-Essex service.

The Department for Transport said that there would be no disruption to services and promised that ticket prices would not be affected.

The government's decision was welcomed by the RMT union, who called for the full renationalisation of the railways. General secretary Bob Crow said: "RMT welcome's this renationalisation of the East Coast route but this shouldn't be a short-term, crisis measure. It should be a long-term solution to the chaos that privatisation has brought to the UK's most lucrative rail franchise".

National Express denied that Bowker, who will become the chief executive of Union Railway in the United Arab Emirates, had resigned due to the firm's financial difficulties.

"We are not in default on any of our commitments. There are no financial problems at group level and Richard Bowker has not left because of financial difficulties," Ray O'Toole, the chief operating officer, said.

The East Coast franchise is thought to have lost at least £20m in the first half of this year after passenger numbers were hit by the recession.

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