TRANSPORT secretary Chris Grayling is to take over the Virgin Trains East Coast franchise, after talks over a possible direct award for Stagecoach and Virgin to replace the present loss-making contract failed to reach agreement.
The Government has now been forced to take action three times since 2006 over problems affecting the Intercity East Coast franchise. The chair of the Commons Transport Committee Lilian Greenwood said it was ‘a very sorry tale’.
Majority East Coast shareholder Stagecoach Group said: “We have now been advised by the Department for Transport that the secretary of state plans to announce today that he intends to appoint the ‘Operator of Last Resort’ to operate InterCity East Coast.”
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. At the end of November last year, it was cut back to 2020.
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 operator of last resort 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.
“Today's 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.”
Lilian Greenwood, who chairs the Commons Transport Committee, said: “It is a very sorry tale.
“Let the Secretary of State be in no doubt – my Committee will be looking closely that what has happened, the choices he made in the run up to this decision and his plans for a new partnership. It is important that the Secretary of State is held to account not just for his policies but his implementation of them.
“The Secretary of State promised that he would publish a full appraisal of the options assessed. I look forward to seeing this as soon as possible and we will look at the Department’s analysis very carefully.”
The East Coast franchise was one of only two in 2016-2017 to make a net profit for the DfT. After the effects of the Network Grant had been taken into account, Virgin Trains East Coast yielded £20.8 million for the Treasury. South West Trains was also profitable, paying £137.6 million.
Anthony Smith, chief executive of the independent watchdog Transport Focus, said: “Whichever organisation runs East Coast services, under whatever new arrangements, passengers will be looking for the quality of current services to be maintained and built on. East Coast is currently the top-rated franchised train service in Great Britain – with 92 per cent overall satisfaction with the last journey in the latest National Rail Passenger Survey.
“While reliability must continue to improve, and promised and new investments made, passengers will continue to judge services by the performance on the day of the train company and Network Rail, value for money, cleanliness of the train and crowding levels.
“Having more stability in the underlying contract between Government and the train company will help achieve these things that matter most to passengers.”