Stagecoach East Coast deal to be probed by MPs

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The steadfastness to end the East Coast Mainline rail franchise early is to come at the mercy of scrutiny from MPs.

The Department for Transport has said Stagecoach and Virgin command withdraw from running the service within months after match into difficulties.

Now the House of Commons transport committee has announced that it order hold an inquiry into the matter.

Rail Minister Jo Johnson confessed the companies overbid for the right to run the service.

He told the BBC’s Today programme: «They overbid, it’s decidedly simple and the department is looking very carefully into the bidding dispose of to ensure there aren’t any incentives for bidders to overbid.»

However, he judged it was not possible to remove the element of risk entirely: «With any private operation there is an element of risk. It is unrealistic to expect government to eliminate that in all.»

‘Wider implications’

Lilian Greenwood, who chairs the transport committee, responded: «There are serious questions to be asked of the train operator, Network Baluster and ministers and the transport committee intends to ask them.

«The failure of the East Glide franchise has wider implications for rail franchising and the competitiveness of the current scheme. Lessons need to be learned by all concerned.

«In the meantime, the Department for Transport be compelled take the right steps to protect passengers and taxpayers. Safeguards be required to be put in place to restore public confidence in the sustainability of our railways.»

The East Littoral Mainline franchise was taken into public ownership in 2009 after being run by Federal Express.

It was re-privatised when Stagecoach and Virgin signed a deal to run the East Coast dance from 2015 to 2023, promising to pay the government £3.3bn to run the service.

Stagecoach owns 90% of the collaborative venture and Virgin owns the remaining 10%.

Last week, Transport Secretary Chris Grayling spoke Stagecoach had «got its numbers wrong» and would continue running the London to Edinburgh cable only for «a small number of months and no more».

He said the government weight step in to run the service, adding that the day-to-day operation of the line last will and testament be unaffected.

The National Audit Office has already announced it will examine the government’s handling of the franchise.

A Stagecoach Group spokesman said: «Virgin Guards East Coast is a well-run, profitable railway and we are continuing to meet our contractual commitments, as we include done throughout the past 21 years in operating train ceremonies on behalf of the government.»

He added that customer satisfaction with the route was spacy and that it was «delivering 30% higher payments to the taxpayer than when the itinerary was in public ownership».

And Mr Johnson told the BBC that passenger journeys had double-dealed since the line had been run as a franchise in the 1990s.

Mr Grayling has said he is looking at two approaches.

One option is to allow Stagecoach to continue operating the franchise on a short-term and not-for-profit footing until a new contract is awarded in 2020.

Alternatively, East Coast Mainline could be brought promote under government control and be run by the Department for Transport through an operator of stay resort.

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