Government terminates Virgin Trains East Coast franchise

Government terminates Virgin Trains East Coast franchise

Grayling had said late past year that the East Coast franchise run since 2015 by Stagecoach, which owns 90 percent alongside Virgin, would need to end early after lower than forecast passenger numbers led to losses of about £200 million for Stagecoach.

Stagecoach boss Martin Griffiths said he was "surprised and disappointed" at the government's decision.

Employees working for Virgin Trains East Coast will transfer over to LNER.

If a franchise is terminated or there are no acceptable private bids, the Secretary of State for Transport can take over the franchise as an operator of last resort.

The collapse of a franchise awarded only in 2014 marks the third time in a decade that private companies have bailed out of running the 400-mile-route, fueling an argument over the future of the railway nearly 25 years after the network was privatized.

Stagecoach confirmed that negotiations had been under way over a new direct award to replace the present franchise, which began in March 2015 and should have run until 2023.

Control will pass in June to the "operator of last resort" - an Arup-led group contracted on the government's behalf.

"It will have representatives of both the train operating team and Network Rail, as well as independent members who will importantly ensure the interests of other operators on the route are taken into account".

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When publicly run, the East Coast franchise delivered over £1bn to the UK Treasury, kept fares down, had record passenger satisfaction and engaged the workforce.

Mr Grayling - and the Government front bench - were further accused of bringing Parliament into disrepute by breaking convention and making the announcement on a designated Opposition Day when Labour was permitted to control the Commons agenda.

Virgin Trains East Coast- a joint venture between Stagecoach and Virgin- had won the right to operate the franchise between London and Edinburgh for eight years in 2014.

Quite the contrary. The disciplines of private sector operation returned more investment and better returns to taxpayers than public sector operation did.

Speaking to BBC political editor Laura Kuenssberg, Transport Secretary Chris Grayling defended the government's handling of the service.

Those advocating renationalisation across the piece should be asking themselves whether DOR would have been able to run the service it did had it been obliged to invest as much in the route as did Virgin Trains or if it were having to return as much to taxpayers as Virgin Trains.

Stagecoach said it has "already impaired intangible assets" and "provided for losses" in relation to the East Coast line in its 2017 financial year results.

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