The FT speculates the government may change the way it hands out rail contracts in the new year, as it fights to restore the system's credibility following renationalisation of the UK's biggest rail contract, the East Coast main line.

According to the FT the reforms being considered include:

* a restructuring of the revenue-sharing agreement between franchise winners and the government to reduce the likelihood of them handing back a contract to run a service during a downturn;
- this translates as more public money to bail out loss-making private operators in the 'tough times'. Precisely the eventuality that Adonis' predecessor, Tom Harris boasted the current round of rail franchise negotiations had been designed to avoid.

* the adoption of longer 15-year franchises as the industry norm to buy greater stability. Most are currently seven years but passenger satisfaction is higher on Chiltern Railways, for example, which has a 20-year contract;
- this is a capitulation to a long-held ambition of the Association of Train Operating Companies who have lobbied the Department for transport for years on this issue. If stability is the issue, why not get rid of franchises altogether and run an integrated, publicly-owned, national network?

* changing the role played by train companies so that they could, for example, improve stations and rolling stock;
- this is a complete red herring. All major rail station refurbishments (Reading, Birmingham New Street, Euston) are jealously guarded by Network Rail and the DfT because of their immense importance for regional and national spatial planning strategies. They won't let a bunch of venal morons who can't run the 16.13 from Worcester Foregate Street on time, anywhere near major station improvement programs. Which just leaves the train companies fighting for the right to put up bicycle racks and hanging baskets, something that they already unfortunately responsible for, with generally dire results. The same goes for rolling stock refurbishments - anything that costs money will likely end up being funded by the taxpayer. Train companies will be allowed to continue painting the aging rolling stock different colours to distract the punters from the grim reality.

* the awarding of franchises on the basis of quality, not just price, so that train operators would be encouraged to submit proposals for improving services at the bidding stage. Furthermore, Passenger Focus, the lobbying group, would be consulted.
- genius! Awarding contracts on quality, not just on the lowest bid. Unfortunately the entire franchise awarding system is based on far more political and financial considerations, such as preventing any one operator having a monopoly of London terminii for example. Quality ain't cheap and if this review ends up recommending a solution that costs the government or the train operators more money to run train services it will be about as welcome as a fart in a spacesuit.

The FT admits the review is an attempt to shore up the rail franchise system, under fire since National Express said in July it would hand its loss-making East Coast main line back to the government. The changes are likely to disappoint unions, which have called for the railways to be renationalised.

Currently, companies bid for the right to run trains on routes. Contracts are often awarded to the train operator that offers the highest premium payments or, if the route requires heavy subsidies to be profitable, to the company that requires the lowest level of state backing.

But MPs, rail chiefs and union leaders have complained that the system places more weight on the financial payback to the government than on passenger services. It also means there is little stability for rail operators, which make their bids according to projected passenger numbers but are vulnerable to any recession.

Train executives complain that a highly regulated structure gives them little leeway to cut service levels in a recession such as the current one.

Train operators are protected by a "cap and collar" arrangement, which ensures that the government funds up to 80 per cent of losses on a franchise contract if a train operator is missing revenue targets after four years.

But while the Association of Train Operating Companies wants this subsidy to be brought forward, the government is also considering linking a proportion of it to gross domestic product. This would reduce the risk of companies reneging on a contract during a downturn.

The Department for Transport confirmed to the FT it was re-examining the franchise system but said it was "not meant to be a fundamental review".