East Coast forecasts ‘wildly wrong’

The East Coast rail franchise failed for a third time because Virgin/stagecoach’s passenger growth forecasts were “wildly wrong”, the Commons public accounts committee said today.

The verdict comes four years after the consortium won the Scotland-london route contract despite paying twice as much as its two previous operators, who both defaulted on repayments to the Treasury.

UK ministers are deciding the future of the franchise after announcing in February Virgin Trains East Coast could go bust within months.

MPS expressed concern it could be allowed to continue running the trains between Edinburgh, Glasgow, Aberdeen, Inverness and London.

The firm was due to end the contract three years early in 2020 because it was struggling to repay the £3.3 billion cost.

MPS said rail franchising by the Department for Transport (DFT) was a “broken model”.

They criticised its “completely inadequate” management of the franchise.

It said the east coast franchise had failed “yet again... because the operator’s passenger growth forecasts were wildly wrong and created a serious gap between predicted revenue and reality”.

GNER and National Express also defaulted on contracts.

The DFT said the “imbalanced” report “fails to grasp the complexity”.