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Government set to take over East Coast Main Line after Stagecoach announces losses

Deniz Huseyin
06 February 2018
Chris Grayling: The problem is that Stagecoach got its numbers wrong. It overbid and is now paying a price
Chris Grayling: The problem is that Stagecoach got its numbers wrong. It overbid and is now paying a price

 

The East Coast Main Line could become a government-run service after lead operator of the franchise Stagecoach revealed significant losses. The franchise was meant to run until 2020, but transport secretary Chris Grayling stated in the Commons yesterday that Stagecoach would only be able to run the service “for a very small number of months and no more”.

Since 2015 the franchise has met all its financial commitments to the taxpayer, returning nearly £1bn to the public purse, Grayling pointed out. “But this has come at a substantial cost of nearly £200m to Stagecoach.”

“The problem is that Stagecoach got its numbers wrong. It overbid and is now paying a price.”

The DfT may have to take over the running of the East Coast franchise, said Grayling. The department would establish whether this option would “deliver value for money for taxpayers and protect the interests of passengers”.

An alternative option would be for Stagecoach to operate services on the East Coast under a “very strictly designed and short-term arrangement”, said Grayling. 

“However, given the circumstances in which the government is having to step in to protect passengers on this line, I am only prepared to consider this option on the basis that the franchise would be operated on a short-term, not-for-profit basis.”

Under these conditions, Stagecoach would only receive a financial reward in return for clearly specified passengers benefits being delivered. “The company cannot be allowed to continue running this franchise and making a profit given what has happened. They got their sums wrong and they will pay the price for that – not the taxpayer.”

Grayling said he would choose the option that best protects the interests of passengers, preserves the interests of taxpayers, by ensuring value for money and supports investment and improvement in the railway, including the deployment of the new Intercity Express trains on the East Coast.

 
 
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