HOWZAT

On Virgin West Coast, (Virgin’s other franchise, which it will have until 2012) passenger numbers are up 40% year-on-year, thanks to higher-frequency services. Collins said: “The government will eventually need private-sector investment in rolling stock and station enhancements to deal with this.”

David Franks, chief executive of National Express’s rail division, said the industry was now in a “back to basics” phase. “The government and the secretary of state are focused on recovery of the industry from the dreadful days post-Hatfield [the fatal derailment at Hatfield, which brought the network close to paralysis] and on cost control. Performance and cost are driving train companies at the moment.”

Transport bosses have abandoned hopes of winning franchises with big-spending plans for new lines or tunnels.

Chris Moyes, chief executive of Go-Ahead, the quoted transport group, said mounting a bid was now a big exercise. “The average bid is a very elaborate and complex document. All bidders are now employing an army of advisers and devoting substantial resources to each franchise tender,” he said.

Franks said that in the first round of bidding for rail franchises when British Rail was broken up in 1996, bidding costs were minimal. “The specifications and requirements in the bids now are far too great. I think the department realises this and is working with us to try to make some changes.”

Bidders have to ensure that they are compliant with the department’s tender documents, and then have the chance to show their entrepreneurial skills by coming up with ideas to make more money.

Go-Ahead is bidding for the Integrated Kent Franchise, which will combine commuter lines to the southeast of London with a new high-speed service on the Channel Tunnel Rail Link from Ashford to St Pancras. The winner will play a key role in providing transport to the Olympic Games in 2012.

Moyes said that while franchise bids were now prescriptive, innovative thinking on the part of bidders would play a part in the final decision. “We do not have a blank canvas, but we are able to show what we can do to make more money for the government,” he said.

Rail-industry leaders believe the rapid growth in passenger numbers means that the government will at some stage have to return to the private sector for investment in infrastructure.

Despite all the bold plans four years ago only one major example of private investment in infrastructure was successful. Chiltern Trains, which runs trains from Marylebone, was able to set up a special-purpose funding company to channel private money into infrastructure improvement.

“The growth forecasts we are looking at are phenomenal,” said Franks. “Motorway congestion and high fuel prices are driving people onto trains, and in some places the network is already operating at absolute capacity,” he said.

Rail entrepreneurs could help by coming up with innovative schemes to squeeze more capacity out of the existing network, Franks said. “There are things you can do with longer trains, creative pricing mechanisms, and changes to signalling. But that will only take you so far.”