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East Coast rail franchise to come under government control

Sky News logo Sky News 16/05/2018

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 Video: Grayling plans East Coast 'partnership'

The government is to take back control of the East Coast rail franchise after its private operators failed to make money. 

Its the third time in less than a decade that a private operator has failed to complete its full term in running services on the route.

Virgin Trains East Coast, a joint venture between Stagecoach (90%) and Virgin (10%), won the 8-year franchise to run services between London and Edinburgh in 2014.

In February, Stagecoach's chief executive Martin Griffiths estimated the company's total losses at £260m.

Transport Secretary Chris Grayling looks out of South Western Railway's first fully-liveried Class 444 train after it arrived into the former international terminal at Waterloo station in central London. © Getty Transport Secretary Chris Grayling looks out of South Western Railway's first fully-liveried Class 444 train after it arrived into the former international terminal at Waterloo station in central London. Transport Secretary Chris Grayling said the East Coast franchise "is not a failing railway." 

"Stagecoach and Virgin Trains got their bid wrong and they are now paying a price," Grayling said in a statement to parliament.

"They will have lost nearly £200m 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."

Virgin Trains East Coast was a joint venture between Stagecoach and Virgin. © Sky News Virgin Trains East Coast was a joint venture between Stagecoach and Virgin. While Grayling said there will be no sanctions against Virgin or Stagecoach for their failures, Labour and unions criticised the decision to end the £3.3bn contract.

Labour's transport secretary Andy McDonald said Mr Grayling had "gifted" the operators a "£2 billion bailout." Mr McDonald said: "Franchising remains at the heart of the alleged partnership.

No amount of tinkering can solve the failings of a broken privatised system, where the public takes the risk and the train companies take the profit, aided and abetted by the Transport Secretary.

" 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.

A Virgin train at Central Station in Glasgow, Scotland © Getty A Virgin train at Central Station in Glasgow, Scotland "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."

ASLEF's general secretary Mick Whelan, who represents trains drivers, called on Mr. Grayling to "bring the rest of our railways back into public ownership.

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

Britains passenger and freight services were broken up and privatised in the 1990s.

Transport Secretary Chris Grayling poses in front of South Western Railway's first fully-liveried Class 444 train after it arrived into the former international terminal at Waterloo station in central London. © Getty Transport Secretary Chris Grayling poses in front of South Western Railway's first fully-liveried Class 444 train after it arrived into the former international terminal at Waterloo station in central London. The government stepped in to run the East Coast line through the Directly Operated Railways between 2009-2015.

Mr Grayling said Virgin Trains East Coast contract will be terminated 24 June and re-branded under "iconic" London North Eastern Railway (LNER) brand.

He said he would consider plans "to enable employees to share directly in the success of LNER both as a pure train operator and subsequently as the new partnership."


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