What next?
At the time of writing, the separate legal actions by Stagecoach and Arriva against the Department for Transport remain active. Speculating on the consequences would be rash.
Industry sources say the DfT appears determined to push all risk onto the private sector, even though the RDG has painted a very grim picture of how that will affect the industry. Plummer says it could break the scheme. And that wasn’t public posturing; it was in a private letter to the Rail Minister.
In the eyes of the Pensions Regulator, a great deal more money has to be found from employers and employees if the pension fund is to remain big enough to pay out in a robust manner for the long term.
Whatever franchising was about, the industry fears the East Midlands deal indicates it has become more about which company is prepared to bear financial risk, rather than which company can come up with the most innovative way of improving services for passengers.
As one executive put it, franchises have become pension funds with passenger services attached. And Stagecoach says this cannot possibly be in the interests of Government, of shareholders in private companies, of railway employees or of passengers.
The boss of one company in the pension scheme says: “The level of naivety that employees have over their pensions is breathtaking. We had a chap who was 56 years old and had 40 years in the scheme. And he had never even read his pension return.
“If one good thing comes out of this – and there won’t be many – it will be that railway people will have a better idea of what they are doing with their money, and what it is actually worth.”
