Thursday, 20 June, 2019

Grayling announcement on East Coast franchise expected

Andy Street was chief executive of John Lewis Andy Street was chief executive of John Lewis
Ginger Lawrence | 17 May, 2018, 04:13

Grayling said he would review Stagecoach and Virgin's right to operate rail services in Britain once the current East Coast contract was terminated.

"The East Coast state company was a huge success until it was abolished by the present Government and this gives us a chance to resurrect it and I hope it leads to a better deal for the travelling public and the staff".

The collapse of a franchise awarded only in 2014 marks the third time in a decade that private companies have bailed out of running the 400-mile-route, fueling an argument over the future of the railway nearly 25 years after the network was privatized.

Now the DfT wants to use the line as a model for a new type of franchise, based on a public-private partnership.

The government is set to renationalise the East Coast mainline, one of Britain's busiest railway lines.

Passengers spoke of their concerns for services on the line when i travelled on one of the red and grey trains in February, with some saying the rail operator should not be allowed to "just walk away".

He expected the majority of the enhanced services planned by Virgin and Stagecoach for delivery by 2023 to be implemented by LNER, although this would largely depend on the ability of infrastructure manager Network Rail to deliver them.

He pledged to "work constructively with the DfT and the OLR" to ensure a "professional transfer" to the new arrangements.

Mr Grayling said: "Stagecoach and Virgin Trains got their bid wrong and they are now paying a price".

The Department for Transport will run the service until a new public-private partnership can be appointed in 2020.

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Labour former minister and Don Valley MP Caroline Flint called on the Government to block future bids for rail franchises from Virgin and Stagecoach - a suggestion which was rebuffed by Mr Grayling.

He added that the firms operating the franchise, which is held under a joint venture between Stagecoach and Virgin owning 90% and 10% respectively, "will have lost almost £200mln" but this had not been a loss to taxpayers "at this time".

Rail operators Stagecoach and Virgin are handing back control of the East Coast train line to the United Kingdom government after admitting they can not afford to keep it running, the transport secretary said Wednesday.

However, Stagecoach and VTEC which have run the line since 2015, will not be in the running for the new contract.

"A multi-disciplinary panel has considered the situation and recommended that both companies continue as train operators".

"Clearly we have to be vigilant about future financial commitments".

"Shadow transport secretary Andy McDonald said Mr Grayling had "gifted" the operators a "£2 billion bailout" after they failed on the main line, adding: "And he has the audacity to come to that despatch box and say it's not reasonable to remove or place conditions on their passport. Rail companies win, passengers and taxpayers lose. Those in the firing line include Northern Rail, South Western, Transpennine Express and Greater Anglia.

Stagecoach said it had attempted to negotiate a new contract with the Department for Transport, without success. "[The Conservatives] are defending a broken system at the passengers expense".

The decision comes after the franchises could no longer meet payments due to lower passenger numbers and profits.