Thursday, 24 May, 2018


Britain to renationalize East Coast rail line as Stagecoach overestimates profit

British government takes direct control of East Coast franchise Exclusive: Government to 'renationalise' East Coast rail after string of failures
Bennie Garza | 16 May, 2018, 18:34

He added that the firms operating the franchise, which is held under a joint venture between Stagecoach and Virgin owning 90% and 10% respectively, "will have lost almost £200mln" but this had not been a loss to taxpayers "at this time".

"I plan to use a period of operator of last resort control to shape the new partnership", said Mr Grayling.

It is the third private operator to fail to complete its full term in running services on the route.

Stagecoach reported losses on the line and in November a year ago Mr Grayling announced that the franchise would be terminated in 2020 to enable it to become a public-private railway.

Labour described the decision to end the £3.3 billion contract as a "bailout".

Those companies have run the lines on a for-profit basis, but the government has been forced to step in when those contracts have failed, and the government-owned Directly Operated Railways ran the East Coast service from 2009-2015.

But Stagecoach reported losses on the line and in November a year ago Mr Grayling announced that the franchise would be terminated in 2020 to enable it to become a public-private railway.

Stagecoach's chief executive Martin Griffiths estimated the company's total losses at £260m, in February.

The public transport operator said the UK Department for Transport has made a decision to appoint "Operator of Last Resort" for the East Coast train service and is "no longer considering" entering into a new franchise contract due to heavy losses incurred by Stagecoach and Virgin.

Stagecoach pledged to "work constructively with the officials and the OLR in the weeks ahead to ensure a "professional transfer to the new arrangements".

"However, we respect the Government's decision".

"East Coast is now the top-rated franchised train service in Great Britain - with 92 per cent overall satisfaction with the last journey in the latest National Rail Passenger Survey". The company also has already funded its full GBP165 million loan commitment to the East Coast franchise.

"Anything else risks playing out the same expensive farce over and over again".

"Britain's railways should be run, successfully, as a public service, not for private profit".

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