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| Stagecoach and Virgin joint-venture wins east coast mainline franchise | |
| (4 months later) | |
| Virgin Trains will be operating on both rail routes linking London and Scotland next year after being awarded the franchise for the reprivatised east coast main line. | Virgin Trains will be operating on both rail routes linking London and Scotland next year after being awarded the franchise for the reprivatised east coast main line. |
| The new company running the London-Edinburgh trains will be Inter City Railways, a joint venture 90%-owned by Stagecoach with the trains branded Virgin Trains East Coast. Sir Richard Branson retains a 10% stake. | The new company running the London-Edinburgh trains will be Inter City Railways, a joint venture 90%-owned by Stagecoach with the trains branded Virgin Trains East Coast. Sir Richard Branson retains a 10% stake. |
| The award defused some of the political controversy after rumours in the City that the franchise would go to Keolis and Eurostar, two partners controlled by France’s state-owned rail company SNCF. | The award defused some of the political controversy after rumours in the City that the franchise would go to Keolis and Eurostar, two partners controlled by France’s state-owned rail company SNCF. |
| Unions have condemned the reprivatisation of the service, which has performed well in public hands over the last five years, recording strong customer satisfaction scores while returning all profit to the Treasury – making payments of £1bn in total. | Unions have condemned the reprivatisation of the service, which has performed well in public hands over the last five years, recording strong customer satisfaction scores while returning all profit to the Treasury – making payments of £1bn in total. |
| The Department for Transport said the franchise award would lead to 23 new services from London, including plans for direct links to Huddersfield, Sunderland and Middlesbrough, and more daily services on the route. | The Department for Transport said the franchise award would lead to 23 new services from London, including plans for direct links to Huddersfield, Sunderland and Middlesbrough, and more daily services on the route. |
| Seat capacity will increase by 50%, with 65 new Intercity Express trains brought into service from 2018, cutting journey times from London to Edinburgh by 13 minutes. | Seat capacity will increase by 50%, with 65 new Intercity Express trains brought into service from 2018, cutting journey times from London to Edinburgh by 13 minutes. |
| East coast has been a focus for controversy over rail franchising since the state-owned company that had been successfully running the line since 2009 was forced to relinquish control. Directly Operated Railways (DOR) stepped in to rescue the London-to-Edinburgh route from National Express, which could not deliver the payments it had promised in its contract. The arms-length operator paid £225m to the government in the last financial year. | East coast has been a focus for controversy over rail franchising since the state-owned company that had been successfully running the line since 2009 was forced to relinquish control. Directly Operated Railways (DOR) stepped in to rescue the London-to-Edinburgh route from National Express, which could not deliver the payments it had promised in its contract. The arms-length operator paid £225m to the government in the last financial year. |
| The transport secretary, Patrick McLoughlin, said: “This is a fantastic deal for passengers and for staff on this vital route. We are putting passengers at the heart of the service. I believe Stagecoach and Virgin will not only deliver for customers but also for the British taxpayer.” | The transport secretary, Patrick McLoughlin, said: “This is a fantastic deal for passengers and for staff on this vital route. We are putting passengers at the heart of the service. I believe Stagecoach and Virgin will not only deliver for customers but also for the British taxpayer.” |
| He said the premium being paid to the government would total £3.3bn over eight years. According to Stagecoach, the premium totals £2.3bn in real terms at 2014 prices. | He said the premium being paid to the government would total £3.3bn over eight years. According to Stagecoach, the premium totals £2.3bn in real terms at 2014 prices. |
| McLoughlin said DOR could not bid, because having the company owned by the Department for Transport running the line was always a “stop-gap measure”. | McLoughlin said DOR could not bid, because having the company owned by the Department for Transport running the line was always a “stop-gap measure”. |
| Branson said: “Our long and fruitful partnership with Stagecoach has revolutionised the west coast line and train travel in the UK, and we are looking forward to bringing the lessons we have learnt across to the east coast and building on the success there.” | Branson said: “Our long and fruitful partnership with Stagecoach has revolutionised the west coast line and train travel in the UK, and we are looking forward to bringing the lessons we have learnt across to the east coast and building on the success there.” |
| Martin Griffiths, the chief executive of Stagecoach Group, said: “We have some fantastic ideas to deliver a more personal travel experience for customers. Investing in the committed people who will make that happen is a big part of our plans, giving opportunities for them to develop and grow into more senior roles.” | Martin Griffiths, the chief executive of Stagecoach Group, said: “We have some fantastic ideas to deliver a more personal travel experience for customers. Investing in the committed people who will make that happen is a big part of our plans, giving opportunities for them to develop and grow into more senior roles.” |
| Stagecoach, which runs the South West Trains and East Midlands Trains networks, said the franchise would lead to £25m being invested in station enhancements including a free wireless network, 50% more bike storage and more car parking spaces. The independent watchdog Passenger Focus said: “Passengers travelling on the East Coast will welcome knowing who will be running their services from March. Inter City Railways will inherit a business that passengers tell us they rate highly, but there is still room for improvement.” | Stagecoach, which runs the South West Trains and East Midlands Trains networks, said the franchise would lead to £25m being invested in station enhancements including a free wireless network, 50% more bike storage and more car parking spaces. The independent watchdog Passenger Focus said: “Passengers travelling on the East Coast will welcome knowing who will be running their services from March. Inter City Railways will inherit a business that passengers tell us they rate highly, but there is still room for improvement.” |
| Unions said returning the east coast to private hands would benefit shareholders and not passengers. The TUC general secretary, Frances O’Grady, said: “The government’s rush to sell off the east coast mainline before the election is a purely ideological move that’s not in the interests of taxpayers or passengers. It’s an example of politics trumping logic. | Unions said returning the east coast to private hands would benefit shareholders and not passengers. The TUC general secretary, Frances O’Grady, said: “The government’s rush to sell off the east coast mainline before the election is a purely ideological move that’s not in the interests of taxpayers or passengers. It’s an example of politics trumping logic. |
| “By privatising the east coast mainline the government is passing the profits to corporate shareholders, instead of using the cash to reduce rail fares and improve services for passengers.” | “By privatising the east coast mainline the government is passing the profits to corporate shareholders, instead of using the cash to reduce rail fares and improve services for passengers.” |
| Mick Cash, the general secretary of the RMT rail union, said the reprivatisation was a “national disgrace”. He said: “While domestic public ownership puts money back into the coffers that can be reinvested in our railways, the private operators, overwhelmingly owned and controlled by European state rail outfits, suck out colossal sums in subsidies and profits – that’s what privatisation means.” | Mick Cash, the general secretary of the RMT rail union, said the reprivatisation was a “national disgrace”. He said: “While domestic public ownership puts money back into the coffers that can be reinvested in our railways, the private operators, overwhelmingly owned and controlled by European state rail outfits, suck out colossal sums in subsidies and profits – that’s what privatisation means.” |
| About three-quarters of Britain’s railways are run in full or part by subsidiaries of foreign, state-owned rail firms, including Deutsche Bahn’s Arriva, the Dutch-owned Abellio and Keolis, 70%-owned by SNCF. The government is also preparing to sell its stake in Eurostar, almost certainly to SNCF, the majority owner. | About three-quarters of Britain’s railways are run in full or part by subsidiaries of foreign, state-owned rail firms, including Deutsche Bahn’s Arriva, the Dutch-owned Abellio and Keolis, 70%-owned by SNCF. The government is also preparing to sell its stake in Eurostar, almost certainly to SNCF, the majority owner. |
| McLoughlin said: “I am delighted to see foreign companies investing in this country, bringing jobs to this country and revenue to the exchequer.” | McLoughlin said: “I am delighted to see foreign companies investing in this country, bringing jobs to this country and revenue to the exchequer.” |
| The independent watchdog Passenger Focus said: “Inter City Railways will inherit a business that passengers tell us they rate highly, but there is still room for improvement.” | The independent watchdog Passenger Focus said: “Inter City Railways will inherit a business that passengers tell us they rate highly, but there is still room for improvement.” |
| The award will come as a further blow for First Group, the other bidder on a shortlist of three, which has missed out on a string of rail franchises since the west coast fiasco in 2012, including the recent loss of both the Thameslink and Scotrail franchises, which it had been operating. Its share price slumped this week on rumours of the loss. | The award will come as a further blow for First Group, the other bidder on a shortlist of three, which has missed out on a string of rail franchises since the west coast fiasco in 2012, including the recent loss of both the Thameslink and Scotrail franchises, which it had been operating. Its share price slumped this week on rumours of the loss. |
| The new east coast franchise begins on 1 March 2015. | The new east coast franchise begins on 1 March 2015. |
| The chequered history of East Coast | The chequered history of East Coast |
| Originally built by three private train companies in the mid-19th century, the east coast mainline was nationalised under British Rail in 1948 and is unique in having enjoyed a stint in state hands after John Major’s privatisation of the railways in 1994. Inter City Railways, running trains branded Virgin Trains East Coast, will be the fourth operator in a little over seven years when it takes over the franchise in March. | Originally built by three private train companies in the mid-19th century, the east coast mainline was nationalised under British Rail in 1948 and is unique in having enjoyed a stint in state hands after John Major’s privatisation of the railways in 1994. Inter City Railways, running trains branded Virgin Trains East Coast, will be the fourth operator in a little over seven years when it takes over the franchise in March. |
| April 1996–December 2007 Great North Eastern Railway | April 1996–December 2007 Great North Eastern Railway |
| GNER’s stint in charge started well enough, with a seven year term extended by two years before it defeated bidders including Virgin to secure a second full franchise from 2005. However, it overbid and struggled to meet the payments (£1.3bn over 10 years) and by late 2006 the government had announced it would need a new operator. | GNER’s stint in charge started well enough, with a seven year term extended by two years before it defeated bidders including Virgin to secure a second full franchise from 2005. However, it overbid and struggled to meet the payments (£1.3bn over 10 years) and by late 2006 the government had announced it would need a new operator. |
| Dec 2007–Nov 2009 National Express | Dec 2007–Nov 2009 National Express |
| The operator that rode in to rescue the line quickly found itself in difficulties of its own. With the sudden onset of a wider financial crisis, ticket sales fell and projected revenue increases never materialised. Negotiations to change the payment terms failed and National Express announced it would default on its contract. | The operator that rode in to rescue the line quickly found itself in difficulties of its own. With the sudden onset of a wider financial crisis, ticket sales fell and projected revenue increases never materialised. Negotiations to change the payment terms failed and National Express announced it would default on its contract. |
| Nov 2009–March 2015 East Coast Trains/Directly Operated Railways | Nov 2009–March 2015 East Coast Trains/Directly Operated Railways |
| DOR, the Department for Transport’s in-house team of last resort, steps in to run the line, its tenure extended after the rail franchising timetable is thrown into chaos by the West Coast fiasco. However, with Labour threatening to keep the line in public ownership if it wins the 2015 election, the coalition sends East Coast to the top of the franchising queue. | DOR, the Department for Transport’s in-house team of last resort, steps in to run the line, its tenure extended after the rail franchising timetable is thrown into chaos by the West Coast fiasco. However, with Labour threatening to keep the line in public ownership if it wins the 2015 election, the coalition sends East Coast to the top of the franchising queue. |
| March 2015 Virgin Trains East Coast | March 2015 Virgin Trains East Coast |
| At the third attempt, albeit as a minority partner with Stagecoach, Sir Richard Branson gets his hands on the other major rail artery linking London and Scotland to join his Virgin trains on the West Coast mainline. | At the third attempt, albeit as a minority partner with Stagecoach, Sir Richard Branson gets his hands on the other major rail artery linking London and Scotland to join his Virgin trains on the West Coast mainline. |