Britain renationalises East Coast rail line

17 May, 2018, 14:51 | Author: Brenda Erickson
  • East Coast rail franchise to come under government control

Mr Grayling told the Commons: "I will terminate Virgin Trains East Coast's contract on June 24 2018".

Virgin Trains East Coast, a joint venture between Stagecoach (90%) and Virgin (10%), won the eight-year franchise to run services between London and Edinburgh in 2014.

Transport Secretary Chris Grayling told Parliament that temporary state ownership would provide the smoothest transition to a new operator.

She said: "Three times in less than a decade, the government has been forced to intervene in the East Coast rail franchise".

The government said on Wednesday it was scrapping the contract with London-listed Stagecoach STG.L five years early and would operate the line, which carries 22 million people annually, for 2-3 years before setting up a new public-private partnership.

Despite this, Grayling denied it was a "failing railway" and insisted taxpayers had not lost out, claiming "the route continues to generate substantial returns for the Government".

Calls for the East Coast Main Line to be re-nationalised have finally been met by the government after it announced the route is to be stripped from Virgin and Stagecoach.

The Rail Delivery Group, the industry body for Britain's railways that includes state-owned Network Rail, pointed out today that Virgin Trains has invested more in the two years in which it has operated the route than DOR did in its five-and-a-half years running it.

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Despite the firms now avoiding up to £2bn in premium payments after the failure of the franchise, Grayling said "it would not be reasonable to place conditions" on Stagecoach or Virgin bidding for further rail services.

Virgin Trains East Coast (VTEC) is the third private operator to fail to complete the full length of a contract.

Stagecoach and Virgin Trains got their bid wrong and they are now paying the price.

McDonald pointed out that the government had failed to impose restrictions on what Virgin and Stagecoach could do next, calling the statement "a smokescreen to divert attention from the failings of his policy".

The government is set to renationalise the East Coast mainline, one of Britain's busiest railway lines. He reiterated that, as the proposed East Coast Partnership contractual structure evolved, the ECML infrastructure would remain in the hands of the public sector via NR.

Stagecoach Group Chief Executive Martin Griffiths said he was "surprised and disappointed": "We will work constructively with the DfT and the OLR in the weeks ahead to ensure a professional transfer to the new arrangements, supporting our employees and maintaining the same clear focus on our customers as we have over the past three years".

He added when the franchise "was run it the public sector, it returned more than £1bn to the Treasury".



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