Awards, contracts & appointments

10.04.19

‘Shocked’ Stagecoach disqualified from three rail franchise bids in row over pensions

Stagecoach has accused ministers of putting the future of the UK rail industry in doubt and said it is “extremely concerned” after the DfT has barred it from three rail franchise bids.

The DfT said that Stagecoach’s bids for the East Midlands, South Eastern and West Coast franchises were “non-compliant” because they breached the rules regarding pensions.

It said the company had “repeatedly ignored established rules” and was “responsible for their own disqualification,” adding that Stagecoach is an experience bidder and was fully aware of the rules of the franchise competitions.

Martin Griffiths, the chief executive of Stagecoach, has called for an “urgent meeting” with the DfT “to discuss our significant concerns” and said the group was “extremely concerned with the decision and its timing.”

He said Stagecoach had drawn on more than two decades of rail experience to develop high-quality proposals consistent with the industry guidance issued by the RDG.

Regarding the pension rules, Griffiths said he was “shocked” the government still expected private operators to take risks they are not best placed to manage through the DfT’s chosen “higher risk approach” instead of the industry’s proposed solution to pensions.

He added that the government’s current franchising model is “not fit for purpose,” as expressed by Keith Williams, and “further damages the already fragile investor confidence in the UK rail market and it undermines the involvement of two of the last British transport groups.”

The government official said that Stagecoach had proposed “significant changes” to the commercial futures of the three franchises, with the DfT today announcing Abellio as the successful bidder for Stagecoach’s East Midlands franchise.

“It is entirely for Stagecoach and their bidding partners to explain why they decided to repeatedly ignore established rules by rejecting the commercial terms on offer.”

Image credit - Peter Byrne/PA Wire/PA Images

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