Government moves to end Stagecoach East Coast mainline franchise

Stagecoach had been accused of "getting its numbers wrong"

The future of the East Coast Mainline rail franchise, which runs through the East Midlands, was thrown into confusion last night (5 February) after Transport Secretary Chris Grayling announced that Stagecoach’s contract to run the service would end early.

Grayling said that Stagecoach had “got its numbers wrong” and that it would only continue to run the East Coast Mainline “for a small number of months” – hinting that the government may run the service.

The line is a joint venture between Stagecoach, which owns 90% and Virgin which owns 10%. The consortium bid £3.3bn to run the service from 2015 to 2013. However, in November, Grayling announced that Stagecoach and Virgin would stop running the service from 2020 after running into financial problems.

Last night, Grayling told the House of Commons: “It has now been confirmed the situation is much more urgent. It is now clear that this franchise will only be able to continue in its current form for a matter of a very small number of months and no more.

“Last week, following detailed analysis, my department issued the franchisee with notification that the franchise had breached a key financial covenant.

“Now, it’s important to be clear with the House, this will not impact on the railway’s day-to-day operations. The business will continue to operate as usual with no impact on services or staff on the East Coast.

“But it does mean I will need to – in the very near future – end the contract and put in place a successor arrangement to operate this railway.

“Given the imminent financial pressure the existing franchise is under, I am taking action now to protect passengers who depend on these train services and ensure continued value for money for taxpayers.”

Grayling said the government was now considering two routes forward: allowing Stagecoach to run the service on a not-for-profit basis until 2020; or taking back the line under public ownership to be run by “an operator of last resort”.

Despite the financial turmoil, Grayling also announced that a Stagecoach and Virgin joint venture had won an extension to operate the West Coast Mainline rail service between London and Glasgow.

He said that this joint venture will operate the West Coast Mainline from 1 April 2018 until potentially 31 March 2020.

Stagecoach Group chief executive Martin Griffiths told the BBC: “A lot has been said and written in the past few months about Virgin Trains East Coast – a lot of it has been misinformed and much of it has been politically motivated.

“The reality is that we’ve neither walked away from the East Coast franchise nor have we received or asked for any special treatment.”

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