East Coast rail franchise to come under government control

Erika Holt
May 17, 2018

Grayling said that the government is willing to take tough decisions when necessary and added: "Mr Speaker, I have also taken official advice about the future of the passports now held by Virgin Holdings and Stagecoach, determining whether they are fit and proper to operate on our railways".

Chris Grayling, the Transport Secretary, will pull the plug on the East Coast rail franchise after a string of failures by Stagecoach and Virgin.

The government then expects to formulate a new public-private partnership to run the East Coast line, Grayling said.

Virgin Trains East Coast - a joint venture between Stagecoach and Virgin - had admitted that it overbid after promising to pay £3.3bn to run the service until 2023.

Grayling said that the scrapping of the contract did not mean that government had lost out, because East Coast had already delivered 1 billion pounds to the public purse, and continued to generate returns, plus passenger satisfaction was high.

In November it was announced the east coast franchise structure in its current form would be replaced by a partnership in 2020, which would see the operator take responsibility for the rail infrastructure as well as the operations.

LNER will have a new board and an independent chairman, and in a departure from past practice will feature representatives of both the train operating team and state-backed track owner Network Rail Ltd., Grayling said.

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.

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Stagecoach chief executive Martin Griffiths said the firm was "surprised and disappointed" by the decision as it believed its plans offered a "positive, value-for-money way forward for passengers, taxpayers and local communities".

Addressing the Commons, he also rejected criticism of the rail privatisation model pursued by the successive governments since the 1990s.

"Despite today's news, we believe that we can continue to make a positive contribution to the United Kingdom rail market, delivering long-term customer benefits and sustainable returns for taxpayers and investors", he added.

The U.K. Government will take control of a key rail artery linking London with Edinburgh in a move that escalates a debate over whether Britain's wider rail network should be re-nationalized.

"The route has its challenges but it is not a failing railway", the minister said, adding that Perth, Scotland-based Stagecoach and Virgin, owned by billionaire Richard Branson, "got their bid wrong and are now paying the price".

He suggested that Chris Grayling should take cues from the last Labour government, "who banned National Express from the rail industry in Britain after they ran East Coast into the ground".

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".

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