Stagecoach responds to ruling

The UK government’s decision to block Perth-headquartered transport group Stagecoach from bidding for three separate rail franchises due to a row over pensions was lawful, the High Court has ruled.

The group sued the Department for Transport (DFT) for disqualifying it from bidding for the East Midlands, West Coast and South Eastern franchises for refusing to accept the risk of pensions liabilities proposed by the Government.

Arriva also brought legal action against the government for disqualifying it from bidding for the East Midlands franchise, but reached a confidential settlement just before the start of a trial in January.

Stagecoach, which bid for the West Coast franchise in partnership with Virgin and French national railway SNCF, claimed the government acted unlawfully in the way it conducted the franchise competition process.

But in a judgment delivered remotely yesterday, Mr Justice Stuart-smith dismissed the claims, ruling that all bidders for the franchises “should and would have realised that material non-compliance on pensions gave rise to a serious risk of principled disqualification”.

He said there was “no indication and no reason to believe” that the terms proposed by the government “were anything other than final or that they invited counter-proposals”.

The judge added: “Nor can I accept that uncertainty of outcome engaged the principle of transparency so as to render the imposition of the risk upon the franchisees unlawful.”

In a statement after the ruling, a Stagecoach spokeswoman said: “We believe there were important issues which needed to be determined by the court to help secure the future of the country’s rail system and our view remains that we were right not to accept the risks in these contracts.

“Nevertheless, while we are disappointed at today’s ruling, we accept the decision and move on. The country is facing a huge challenge.”