Contract goes off rails as minister ready to call an end to franchise

The East Coast rail franchise could be scrapped this week, according to reports.

Transport Secretary Chris Grayling is set to announce who will operate trains on the line between London and Edinburgh in the wake of Virgin Trains East Coast withdrawing from its contract.

Mr Grayling previously said he will either put the franchise into public control through an operator of last resort – a consortium led by Arup – or negotiate a short-term deal with the incumbent.

The Financial Times reported that a decision “is expected before the end of the week”.

In November 2014, Virgin Trains East Coast – a joint venture between Stagecoach (90%) and Virgin (10%) – was awarded the franchise to run trains for eight years.

Stagecoach reported losses on the line and in November last year Mr Grayling announced that the franchise would be terminated in 2020 to enable it to become a publicprivate railway.

But two months later Mr Grayling told the Commons that the franchise would only be able to continue in its current form for a “very small number of months”.

He said Stagecoach had “got its numbers wrong” and had “overbid”.

Virgin Trains East Coast had agreed to pay £3.3 billion to run the service until 2023.

Stagecoach chief executive Martin Griffiths told the Commons Public Accounts Committee that the collapse of the franchise was a “very painful experience”.

He said Stagecoach will lose more than £200 million over the course of the franchise.

Decision: Chris Grayling.