Decision to end East Coast Mainline Virgin and Stagecoach franchise early to be investigated
The decision to end the East Coast Mainline rail franchise early is to come under scrutiny from MPs. The Department for Transport has said Stagecoach and Virgin will withdraw from running the service within months after running into difficulties.
Now the House of Commons transport committee has announced that it will hold an inquiry into the matter. Lilian Greenwood, who chairs the committee, said lessons needed to be learned from the failure.
Last week, Transport Secretary Chris Grayling said Stagecoach had “got its numbers wrong” and would continue running the London to Edinburgh line only for “a small number of months and no more”.
He said the government might step in to run the service, adding that the day-to-day operation of the line would be unaffected.
The National Audit Office has already announced it will investigate the government’s handling of the franchise.
The East Coast Mainline franchise was taken into public ownership in 2009 after being run by National Express.
It was re-privatised when Stagecoach and Virgin signed a deal to run the East Coast line from 2015 to 2023, promising to pay the government £3.3bn to run the service.
Stagecoach owns 90% of the joint venture and Virgin owns the remaining 10%.
Lessons to learn
Ms Greenwood said: “There are serious questions to be asked of the train operator, Network Rail and ministers and the transport committee intends to ask them.
“The failure of the East Coast franchise has wider implications for rail franchising and the competitiveness of the current system. Lessons need to be learned by all concerned.
“In the meantime, the Department for Transport must take the right steps to protect passengers and taxpayers. Safeguards must be put in place to restore public confidence in the sustainability of our railways.”
Mr Grayling has said he is considering two approaches.
One option is to allow Stagecoach to continue operating the franchise on a short-term and not-for-profit basis until a new contract is awarded in 2020.
Alternatively, East Coast Mainline could be brought back under government control and be run by the Department for Transport through an operator of last resort.
Mr Grayling told the House of Commons on Monday last week: “The problem is that Stagecoach got its numbers wrong. It overbid and is now paying a price.”