HS2

15.05.18

Grayling due to pull the plug on East Coast franchise this week

Chris Grayling is due to scrap the East Coast franchise before the end of the week after operators Stagecoach and Virgin suffered heavy losses, it has been reported.

Two sources told the Financial Times that the DfT is set to pull the plug on the failing franchise this week, a move which would come just over three months after the transport secretary revealed it was indeed very close to collapse

Options on the table include either nationalising the line temporarily – which would be unlikely given Grayling’s track record on privatisation – or renegotiating a temporary not-for-profit management agreement with the two current operators.

He is soon expected to announce a short-term solution for the next two years.

The move would come after a difficult few months for Virgin Trains East Coast (VTEC), which itself adds to the franchise’s unfortunate history: it marks the third time a commercial franchise agreement has broken down on this part of the railway in just over 10 years.

The Transport Committee has recently launched an inquiry into the issue, while Grayling himself has been personally threatened with legal action by a campaign team backed by public law experts Leigh Day.

Just last month, the Public Accounts Committee expressed concern that the government had not learned from previous failures under the currently “broken” franchising model, and would allow Virgin to bid for other services again in future despite its failings.

Virgin owner Sir Richard Branson has also added to the debate, heaping criticism on Network Rail over what he considered to be a failure to live up to infrastructure improvement promises.

The transport secretary originally announced in November last year that the franchise was going to end three years early, with a new operator due to run under a public-private partnership likely similar to the next South Eastern model.

Grayling explained this year that the day-to-day operation of the railway would be unaffected, but confirmed that the TOC had breached a “key financial covenant” after Stagecoach “got its numbers wrong” and overbid on the original contract.

In a statement, VTEC told the Financial Times that the company believes it is “best placed to continue the transformation already underway on East Coast” and to provide a “smooth transition to the new East Coast Partnership.”

Top image: Danny Lawson, PA Images

Comments

There are no comments. Why not be the first?

Add your comment

 

rail technology magazine tv

more videos >

latest rail news

Former Aston Villa chair announced as WMCA HS2 growth delivery chair

21/09/2018Former Aston Villa chair announced as WMCA HS2 growth delivery chair

Steve Hollis has been announced as the new chair of the West Midlands Combined Authority (WMCA) HS2 growth delivery board. A former chairman... more >
Major northern station upgrade reaches phase two of redevelopment

21/09/2018Major northern station upgrade reaches phase two of redevelopment

Plans to improve the Doncaster Railway Station have reached phase two of the redevelopment process. Work has begun on the plans, developed b... more >
Northern unveils new digital train for roll-out at end of year

21/09/2018Northern unveils new digital train for roll-out at end of year

Northern has unveiled its refurbished Class 158 digital train for passengers, ahead of the new fleet’s complete roll-out by the end of the ... more >

editor's comment

23/01/2018Out with the old...

Despite a few disappointing policy announcements, especially for the electrification aficionados amongst us, 2017 was, like Darren Caplan writes on page 20, a year generally marked by positive news for the rail industry. We polished off the iconic Ordsall Chord (p32), hit some solid milestones on Thameslink (p40), progressed on ambitious rolling stock orders (p16), and finally started moving forward on HS2 (p14) ‒ paving the way for a New Ye... read more >

last word

Encouraging youngsters to be safe on the railway

Encouraging youngsters to be safe on the railway

This summer, Arriva Group's CrossCountry and the Scout Association joined to launch a new partnership to promote rail safety among young people. Chris Leech MBE, business community manager at the... more > more last word articles >

'the sleepers' daily blog

The East Coast franchise report tells us what we already knew: it was a bid set up to fail

18/09/2018The East Coast franchise report tells us what we already knew: it was a bid set up to fail

RTM's Jack Donnelly assesses what the Transport Committee's latest report on the VTEC franchise means for the industry as a whole “Even now, there is no concrete plan, nor timescales, for the interim operator of this franchise. From our inquiry, we cannot be sure, and cannot reassure passengers or public, that the arrangements ... more >
read more blog posts from 'the sleeper' >

comment

Northern Powerhouse Rail: The need for change

18/09/2018Northern Powerhouse Rail: The need for change

Northern Powerhouse Rail (NPR) will be transformational for the north – it will change the way people live, work, and play. It will rebalan... more >
Innovation through people and technology

18/09/2018Innovation through people and technology

Ian Prosser, HM chief inspector of railways and director of railway safety at the ORR, picks out the key industry challenges to focus on based on... more >
Why we all must mind the gap

18/09/2018Why we all must mind the gap

Clair Mowbray, chief executive of the National College for High Speed Rail (NCHSR), explains how we can all ensure the UK’s next generation... more >
3D printing: from virtual to real

11/09/20183D printing: from virtual to real

Like so many other technological advancements, 3D printing has moved from being the stuff of science fiction, through niche industrial applicatio... more >

rail industry focus

View all News

interviews

Going global: an interview with Network Rail’s Leevan Finney

29/08/2018Going global: an interview with Network Rail’s Leevan Finney

RTM’s Jack Donnelly sat down with one of the leading minds behind Network Rail’s most advanced and innovative rail maintenance techno... more >