12.02.18
Inquiry launched into third East Coast franchise failure in 10 years
The transport committee has today officially launched its inquiry into the “imminent failure” of the Intercity East Coast rail franchise.
This will be the third collapse of a commercial franchise agreement on this part of the railway in just over 10 years.
The last time a commercial operator failed to meet its contractual obligations in 2009, operations were taken back into public ownership through Directly Operated Railways under the brand name East Coast Trains.
Last year, the transport secretary announced that the current contract, which has been held by Virgin Trains East Coast (VTEC) since March 2015, was unlikely to run its full course to 2023, proposing to replace it with a new type of public/private agreement, the East Coast Partnership, from 2020.
In oral evidence to the committee on 22 January 2018, Chris Grayling said that the franchise had run into difficulties “purely and simply” due to the revenue that it had received to date.
On 5 February he then announced that the franchise was likely to fail within “a very small number of months.”
Given the imminent failure of the current franchise, Grayling has set out two options for the interim period for 2020.
He has proposed that services be taken “in-house” and operated directly by the department for transport, or some form of short term agreement, not for profit arrangement with VTEC.
Lillian Greenwood, chair of the committee, said: “This failure – not once, but three times – has drawn criticism from all corners.”
She said that Network Rail and the committee intends to ask the serious questions of the train operator.
“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,” she explained.
Greenwood added: “In the meantime, the DfT 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.”
The inquiry will examine the lessons to be learned from this and previous franchise failures on this part of the network, how to proceed in both the short and long term, and the wider implications for the rail franchising system.
The deadline for written submissions is Monday 26 March 2018.
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