Ministers have been accused of disguising the early ending of the struggling East Coast rail franchise in yesterday’s launch of the Government’s Strategic Vision for rail, a move that could cost taxpayers millions of pounds.
Transport secretary Chris Grayling announced on Wednesday that a new East Coast Partnership would be formed from 2020.
The partnership between the public and private sectors will be responsible for both intercity trains and track operations on the lines between London, Yorkshire, the North East and Scotland.
This would bring to an end the current Virgin Trains East Coast franchise, a joint venture between Virgin and Stagecoach, which began in 2015 and is due to run until 2023.
Earlier this year, Stagecoach said it had overbid on the £3.3bn contract and wanted to renegotiate its terms, which was publicly resisted by the Department for Transport (DfT).
Following yesterday’s announcement, former Labour transport secretary Lord Andrew Adonis tweeted that the Government was ‘bailing out Stagecoach/Virgin because they overbid’ and should have stuck with the public sector operation he had set up following an earlier franchise failure.
He added that the move would cost the taxpayer hundreds of millions of pounds in foregone 'premium payments' that the franchise holders were contracted to make 2020 and 2023.
Rail expert Christian Wolmar told Transport Network the move was ‘a big blow to the franchising programme’.
He said: ‘We don’t quite know the nature of this deal but I think what is interesting is the way they have tried to hide it. Next week Stagecoach have got their six-monthly figures coming out and clearly they were going to make an announcement then.
'So what they have done is roll this into a whole host of different announcements about Beeching cuts and whatever and disguised it. That is pretty dodgy, given that this is a very significant amount of money that is now not going to arrive.'
A DfT spokesperson confirmed that the move would see the franchise end early but declined to comment further.