Stagecoach East Coast rail line franchise ‘to be axed in days’

June 4, 2018

The UK Government is set to axe the East Coast rail line franchise in a matter of days after heavy losses for operators Stagecoach and Virgin.

According to the FT, an announcement is due before the end of the week – months after Transport Secretary Chris Grayling admitted the existing franchise was unsustainable.

The ending of the contract would mean it’s the time time in under a decade that the UK Government has been forced to intervene on the London to Edinburgh line.

It now has the option of nationalising the line temporarily or putting the line in the hands of a temporary not-for-profit management agreement with Stagecoach and Virgin.

Stagecoach owns 90 per cent of the franchise while Virgin holds 10 per cent.

The deal was signed in 2015 but passenger numbers have not met expectations, meaning it has suffered heavy losses.

In November last year Chris Grayling announced the franchise would be replaced three years earlier than expected in 2020.

And he admitted the franchise would only be able to continue in its current form for a “very small number of months”.

The public accounts committee found last month that the passenger growth forecasts by Virgin and Stagecoach had been “wildly wrong” and proved that rail franchising was a “broken model”.

In February the Transport Committee said it was launching an inquiry into it, saying there were “serious questions” to be asked and added that they would look at the best way forward as well as the wider implications for the rail franchising system.

Lilian Greenwood, chair of the Transport Committee, said at the time: “This failure – not once, but three times – has drawn criticism from all corners.

“There are serious questions to be asked of the train operator, Network Rail and ministers, and the Transport Committee intends to ask them.

“The failure of the East Coast franchise has wider implications for rail franchising and the competitiveness of the current system.

“Lessons need to be learned by all concerned. In the meantime, the Department for Transport must take the right steps to protect passengers and taxpayers.

“Safeguards must be put in place to restore public confidence in the sustainability of our railways.”

Virgin Trains East Coast said it had “met or exceeded all of our contractual commitments on the East Coast”. It added: “We believe we are best placed to continue the transformation already under way on East Coast . . . and provide a smooth transition to the new East Coast Partnership.”

A Stagecoach Group spokesman previously said: “Virgin Trains East Coast is a well-run, profitable railway and we are continuing to meet our contractual commitments, as we have done throughout the past 21 years in operating train services on behalf of the government.”

Source: Insider