---

Railways: National Express Franchises

My Lords, there is no truth whatever in the suggestion that Stephen Byers came to any arrangement with me on any matter relating to National Express. It is equally untrue to suggest that National Express was allowed by the Government to avoid any of its rail contract obligations when the company’s east coast subsidiary announced its intention to default on its franchise on 1 July last year. Stephen Byers had a brief conversation in the House of Commons with me last June about the east coast main line. We discussed his experience in dealing with rail franchise difficulties when transport secretary. As regards the situation then facing National Express, I told him that despite the company’s difficulties, I had no intention whatever of renegotiating the east coast franchise on terms favourable to the company as the company was seeking in its approaches to my department. I told Mr Byers that such a move would undermine the rail franchise system and would not be in the best interests of taxpayers. This is precisely the policy that I pursued and announced to Parliament on 1 July last year when National Express indicated its intention to default on its east coast franchise. The Government declined to renegotiate the east coast contract. I required National Express to pay the full amount that was due for its failure to meet its contractual obligations under the east coast franchise, and I took every step that was legally possible in relation to the other National Express franchise contracts. This included my Statement to the House on 26 November that the company’s profitable East Anglia franchise would be terminated three years early, with all profits foregone. These are the facts. Any claims to the contrary are pure fantasy.