Temporary nationalised operator announced for East Coast Mainline service
Transport Secretary, Chris Grayling, yesterday confirmed that the East Coast Mainline, which stops at York, Leeds and Wakefield Westgate, was to be be re-nationalised. This will be a temporary arrangement before the service is privatised again.
The East Coast rail franchise is run by Stagecoach, which owns 90% of the franchise, and Virgin, which owns 10%. It had been awarded the franchise for eight years in 2014.
In a statement, the Department for Transport said: “Tickets, timetables and train services will all stay the same even though a different operator will be in charge. There will be a short transition period.”
Stagecoach Group chief executive, Martin Griffiths, said: “We are surprised and disappointed that the Department for Transport has chosen not to proceed with our proposals. We believe our plans offered a positive, value-for-money way forward for passengers, taxpayers and local communities, ensuring the continuation of the exciting transformation already underway on East Coast and a smooth transition to the Government’s new East Coast Partnership.
“However, we respect the Government’s decision. 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.
“This decision should not detract from the hard work and dedication of our people at Virgin Trains East Coast, who have been central to the transformation we have been delivering for our customers over the past three years. During that time, we have attracted more passengers, greatly increased investment, achieved industry leading customer satisfaction and made significant payments to the taxpayer to reinvest in public services.
“Despite the news, we believe that we can continue to make a positive contribution to the UK rail market, delivering long-term customer benefits and sustainable returns for taxpayers and investors.”
In February, Grayling said the current franchise would run out of money within months. Yesterday he added: “This is not because the route is failing. It continues and will continue to generate substantial returns for the government, and the most recent figures show passenger satisfaction at 92%. The route has its challenges, but it is not a failing railway.
“However, as I explained in February, Stagecoach and Virgin Trains got their bid wrong and they are now paying a price. They will have lost nearly £200 million meeting their contracted commitments.
“This means taxpayers have not lost out because revenues are lower than predicted: only Virgin Trains East Coast and its parent companies have made losses at this time.”
A new board with an independent chair will be created to oversee the operation of the LNER route. When it is fully formed, the new LNER operation will be a partnership between the public and private sectors.
Staff have been told that the changes will not impact on their employment.
Grayling added: “It is vital that we remember the benefits the railway has seen since privatisation. Passenger numbers have doubled. New trains with new technology are being rolled out across the network. Innovation has driven up passenger satisfaction and we’re seeing huge amounts of private investment in the future of our railways.
“And the lessons of the financial failure of the East Coast Mainline are already being learnt. But our ambitions are bigger. In the ‘Rail strategy’ we published last year, we began work to look at the future of the industry – to make the private sector model fit for changing travel patterns, new technology and focused on a better quality passenger experience.”
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