Buyout teams line up for rail franchise bids

Management and employee buyout teams emerged as bidders for the second batch of British Rail franchises which were put out to tender yesterday.

Stagecoach, Britain's biggest bus company, was also poised to join the bidding after pitching for all three of the first batch of franchises.

The company was to have made a public announcement last night on its intentions for the four new franchises but had to delay after failing to finalise its arrangements with its partners.

The franchising director, Roger Salmon, announced that initial bids for the four lines - East Coast Main Line, Gatwick Express, Midland Main Line and Network SouthCentral - have to be submitted by 8 December.

As with the earlier bids, Mr Salmon has barred BR from putting in a bid. This appears to fly in the face of the legislation as during the passage of the Railways Act a concession was made to allow BR to bid in order to avert a threatened rebellion by backbench Tory MPs and Lords.

Management and employee buyout teams declared themselves publicly for two of the four and it is known that similar bids will be made for the other two.The buy-out team for the prestigious East Coast line said that the line would be safe in its hands. Brian Burdsall, the current managing director of the line, who is heading the bid, said: "The people who operate InterCity East Coast today are the best people to do so in the future."

The buyout team is planning to tie-in many of the subsidiary services such as property development, catering and retailing, rather than contracting them out to third parties.

The franchise for Midland Main Line, which covers InterCity services from St Pancras to the East Midlands and Sheffield, may have to be delayed because of uncertainty over the precise details of the Channel Tunnel rail link scheme, which is due to terminate at St Pancras. The two remaining bidders to build the link, Eurorail and London & Continental, have differing plans for the station which may have important implications for the Midland Main Line franchise. This has not deterred Richard Brown, managing director of the present BR-owned Midland Main Line, and leader of the buy-out team. "We certainly see ourselves as the right people to go on running Midland Main Line. We believe the route has exciting potential for the future, particularly in the longer term when it links into the Channel Tunnel rail link at St Pancras," he said.

Teams from Gatwick Express (which links London's Victoria with Gatwick airport) and Network SouthCentral (which operates services to the South Coast calling at Gatwick en route) are also preparing bids. Both are also expected to bid for each other since the franchises are seen as complementary. This will pose an awkward problem for Mr Salmon, since one of the original aims of rail privatisation was to provide competition between different train operators.

The buy-out teams are allowed up to pounds 100,000 from Treasury funds to help pay for their bids. Final bids for the first group of franchises - Great Western, South West Trains and LTS Rail - have to be submitted by 27 October and Mr Salmon hopes to announce the successful bidders by the end of the year. However, the bidding process is well behind the Government's target of having 51 per cent of franchises, by passenger revenue, in the private sector on 1 April next year. Only the first three, representing 20 per cent, could possible be in private hands by that date.