06.02.18
Stagecoach and Virgin awarded West Coast extension despite East Coast failure
The transport secretary has this week confirmed a two-year extension to the Virgin Trains West Coast contract despite admitting the East Coast franchise, run by the same two companies, is months from collapse.
Chris Grayling said the decision had been planned for more than a year, as a transitional step in the move from the current TOC system to the new West Coast Partnership.
While the failing Virgin Trains East Coast is mainly run by Stagecoach, its west coast counterpart is 51% controlled by Virgin and is operating profitably, according to Grayling.
He said that this joint venture had agreed on a deal to operate the West Coast mainline which will run from 1 April 2018 possibly until 31 March 2020.
The decision has been heavily criticised by opposition MPs, with shadow transport secretary Andy McDonald calling the move a “handout to private shareholders at the public’s expense.”
“That Chris Grayling awarded a profitable contract to Virgin and Stagecoach on the west coast while simultaneously confirming the same companies have collapsed on the east coast shows government policy is in chaos,” McDonald said.
“This is yet another Tory handout to private shareholders at the public’s expense. Failing train companies should not be awarded future contracts, but this government is rewarding them for failure by extending their lucrative deal.”
In a House of Commons debate, Grayling reminded MPs that the west coast franchise will be responsible for the first HS2 passenger services and explained that the extension had always been part of government plans.
“Let me be absolutely clear that the East Coast and West Coast franchises should not be confused,” he explained.
“As with the East Coast franchise, the west coast operator is meeting all its financial obligations, but the West Coast franchise has a completely different corporate structure, in which Virgin Trains is the majority shareholder.
“As was set out 14 months ago, the direct award is a sensible bridge between the existing contract and the west coast partnership. Once that partnership is ready, the direct award will cease to exist.”
The secretary also explained that there are no legal grounds to stop Stagecoach bidding for future government contracts, such as the East Midlands franchise, which one of its subsidiary companies has been shortlisted for.
Have you got a story to tell? Would you like to become an RTM columnist? If so, click here.