East Coast line may be nationalised in weeks

THE East Coast main line may be nationalised in a matter of weeks due to a string of failures by Stagecoach and Virgin, the Transport Secretary said yesterday.

The companies, which have held the franchise since 2015, had already announced they would be handing it back three years early, having originally agreed to pay £3.3bn for a contract running until 2023.

But in the Commons yesterday, Chris Grayling revealed the rail firms could walk away within weeks, adding the prospect of the Government “directly” operating the franchise was now “very much on the table”.

Critics said last night that such a move would cost taxpayers hundreds of millions of pounds, and would mean the London-to-edinburgh line being nationalised just three years after it was reprivatised.

Mr Grayling said: “It is now clear that this franchise will only be able to continue in its current form for a matter of a very small number of months and no more.

“Given the imminent financial pressure the existing franchise is under, I am taking action now to protect passengers who depend on these train services and ensure continued value for money for taxpayers. The problem is that Stagecoach got its numbers wrong. It overbid and is now paying a price.”

The Government said it remained open to the possibility of allowing Stagecoach to retain the franchise until 2020 on a not-for-profit basis, but was preparing to take control of the line if needs be.

The East Coast main line is a 90:10 venture between Stagecoach and Virgin. Last year the firms admitted they had overestimated passenger numbers and suffered a revenue shortfall.

Mr Grayling was criticised yesterday for handing Virgin a one-year extension to run services on the West Coast main line. Andy Mcdonald, the shadow transport secretary, said: “Failing train companies should not be awarded future contracts, but this Government is rewarding them for failure by extending their lucrative deal.

“The Transport Secretary’s failure to stand up to Virgin and Stagecoach is a disgrace. He’s supposed to protect taxpayers’ interests, not sacrifice them to private shareholders.”