New UK East Coast rail franchise to be public-private partnership - minister

Wednesday, 16 May, 2018

Ms Mayer said: "We should take heed of other successful European models of rail ownership and I look forward to a Labour government which will bring all rail lines back under public control where they belong".

The transport secretary, Chris Grayling, told the House of Commons that after a "finely balanced" assessment by civil servants, he had made a decision to appoint the "operator of last resort" - a group led by the firm Arup and under government control - to run the service, rather than allow Stagecoach and Virgin to continue under fresh terms.

Mr Grayling said the decision had been "very finely balanced" between an operator of last resort and a new, non-profit contract for Vtec.

"We will work constructively with the DfT and the OLR in the weeks ahead to ensure a professional transfer to the new arrangements, supporting our employees and maintaining the same clear focus on our customers as we have over the past three years".

Transport Secretary Chris Grayling said he would terminate the contract with Virgin Trains East Coast from the end of next month.

He said the aim was to create a new public-private partnership from 2020, with "one simple team operating the railway".

Stagecoach and Virgin were supposed to run services on the line until 2013, but the government had previously agreed to let them walk away from the agreement three years early.

Virgin Trains East Coast is the third private operator to fail to complete the full length of a contract to run services on the East Coast route.

Rival firm GNER was stripped of the route in 2007 after its parent company suffered financial difficulties, while National Express withdrew in 2009.

Passenger and freight rail services in Britain were privatized in the 1990s when routes were grouped into franchises and operators bid to run services for a set number of years.

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

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

Virgin Trains East Coast - a joint venture between Stagecoach and Virgin - was awarded the eight-year franchise to run trains in November 2014.

In February Grayling admitted the beleaguered East Coast mainline rail franchise had collapsed.