East Coast rail franchise to come under government control
The government is to take back control of the East Coast rail franchise after its private operators failed to make money.
Virgin Trains East Coast, a joint venture between Stagecoach (90%) and Virgin (10%) won the right to operate the franchise between London and Edinburgh for eight years in 2014.
Its the third private operator to fail to complete its full term in running the services on the route.
In February, Stagecoach’s chief executive Martin Griffiths estimated the company’s total losses at £260m.
Transport Secretary Chris Grayling said the East Coast franchise “is not a failing railway” and Stagecoach and Virgin got their sums wrong.
“I plan to use a period of Operator of Last Resort control to shape the new partnership,” Grayling said.
While Grayling said there will be no sanctions against Virgin or Stagecoach for their failures, Labour and unions described the decision to end the £3.3bn contract as a “bailout”.
Rail, Maritime and Transport union general secretary Mick Cash said: “This is the second time that the Government have called upon the public sector to launch a rescue operation on the East Coast Main Line and instead of being a temporary arrangement Chris Grayling should listen to his staff and the public and make it permanent.
“After three shambolic private sector failures on the East Coast the message should now sink in that these cowboys cannot be trusted and should be locked out of the system on a permanent basis.
“Anything else risks playing out the same expensive farce over and over again. RMT will now be seeking an urgent meeting with the new operator to bolt down guarantees for staff on jobs, conditions and pensions.”