East Coast rail nationalised as third franchise collapses
● Stagecoach and Virgin stripped of contract after ‘getting sums wrong’
Trains between Scotland and London on the east coast main line will be back in public hands from next month after struggling Virgin Trains East Coast (Vtec) was stripped of the franchise.
The Stagecoach-led operator will be replaced by a public sector “operator of last resort” (OLR) which will revive the historic name London North Eastern Railway (LNER).
However, UK Transport Secretary Chris Grayling stressed the change, set for 24 June, would not affect passengers, bookings or staff.
Vtec, which is the third private operator to hit financial difficulties for bidding too much for the franchise, was denied a new contract.
The franchise, which operates trains between Edinburgh, Aberdeen, Inverness, Glasgow and London King’s Cross, was previously operated by the UK government from
2009 -15 after the last collapse. Unions and Labour want it to remain permanently in state hands, but the government intends to re-let it to a private operator “in the early 2020s”.
Perth-based Stagecoach, which has a 90 per cent stake in the franchise, angered MPS by announcing the decision minutes before Mr Grayling made a statement to the House of Commons.
Mr Grayling said: “Stagecoach and Virgin Trains got their bid wrong and they are now paying a price.”
However, he also said: “The route has its challenges but it is not a failing railway.”
Services continue as normal, pre-booked tickets will remain valid, and staff will be transferred to LNER.
Vtec had struggled to repay the £3.3 billion it bid to run the franchise – twice as much as its two private sector predecessors, GNER and National Express, which both defaulted on their contracts.
LNER, one of the classic “Big Four” railway companies, ran trains including the Flying Scotsman on the Edinburghlondon line from 1923 until nationalisation in 1948.
Mr Grayling said the decision had been “very finely balanced” between an operator of last resort and a new, nonprofit contract for Vtec.
However, he said he wanted the “smoothest possible transition” to the planned new East Coast Partnership, which is due to run both trains and tracks on the route.
This was due to start in 2020 but has now been put back to the “early 2020s”.
Scottish Government transport minister Humza Yousaf earlier told MSPS he had no preference between the two options, and the key issue was ensuring no service cuts.
However, in a statement hours later, he said: “In the circumstances of the third successive failure of the UK government’s east coast franchise, an operator of last resort solution is the better of the available options.
“Given the importance of east coast services to Scotland, we will press the UK government for involvement in the new LNER board.
“We will also require assurance that there will be no reduction in service levels for Scottish passengers, and that promised improvements to Scottish east coast services will still be delivered without further delay.”
The Department for Transport denied claims some trains north of Edinburgh could be cut in December because of improvements to Scotrail’s inter-city services.
Scottish Labour transport spokesman Colin Smyth said: “Just hours before the UK government confirmed its failed privatisation experiment had come undone, SNP transport minister Humza Yousaf brazenly shrugged his shoulders and said he doesn’t even care whether the east coast rail franchise is in public hands or not. That is an insult to passengers and hard-working rail staff, not to mention potentially damaging to Scotland’s economy.”
Stagecoach Group chief executive Martin Griffiths said: “We are surprised and disappointed 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 under way.”
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.”
The RMT, the largest rail union, called for a permanent switch to the public sector.
‘There will be no immediate changes to ticket prices’