Transport secretary Chris Grayling is expected to announce the fate of the East Coast rail franchise ‘within days’.
According to the Guardian, Grayling is deciding whether to renationalise the rail line between London and Edinburgh or negotiate a not-for-profit arrangement with current franchisees Stagecoach and Virgin Trains.
The Department for Transport (DfT) announced in November that the franchise would have to be replaced in 2020 – three years earlier than Stagecoach and Virgin Trains’ contract was due to end – after the rail companies said they would fall into financial trouble if they kept the franchise.
At the time, Virgin Group owner Sir Richard Branson said the partnership’s bid for the franchise was “based on a number of key assumptions and a promise of a huge upgrade of the infrastructure by Network Rail”, which faced delays.
Just months later in February this year, Grayling said the franchise would have to end ‘sooner rather than later’, as the situation was “much more urgent” than originally thought. Grayling put forward the idea of the DfT running the line, as well as the not-for-profit arrangement with Stagecoach.
But now the Financial Times reports that Grayling may be considering scrapping the franchise, which would be the third time in less than a decade that the government has been forced to act on the contract.
Former transport minister Lord Adonis labelled the government’s decision a ‘bailout’ for the companies that would cost the taxpayer billions of pounds. In response to the Guardian article, on Twitter Adonis said: “Don’t fall for [the] words ‘not for profit’. Virgin and Stagecoach will do very nicely out of this ‘not for profit’ contract – [and] it is a real scandal if they get it, since they have just been given a £2 billion bailout from their previous contract.”
In April, MPs criticised the government's decision to allow the East Coast franchise to end early, saying the Department for Transport had 'failed to learn' from past failures.