East Coast rail franchise to come under government control

East coast main line train

The London to Edinburgh line has been run by a joint venture between Stagecoach and Virgin, for the last three years.

A Virgin Train on the East Coast Main Line.

ECML has been negotiating a new direct award franchise with the department but now understands that the secretary of state for transport is "no longer considering entering into a new franchise" with East Coast Mainline, Stagecoach said in a statement.

Former transport minister Lord Adonis labelled the government's decision a "bailout" for the companies that would cost the taxpayer billions of pounds.

'The team that's been working for me since last autumn to form the Operator of Last Resort will take immediate control of passenger services. So I am instructing the new board, working with my officials, to bring forward proposals which enable employees to share directly in the success of LNER both as a pure train operator and subsequently as the new partnership.

It is the third private operator to fail to complete its full term in running services on the route.

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Rival firm GNER was stripped of the route in 2007 after its parent company suffered financial difficulties, while National Express withdrew in 2009.

"Despite today's news, we believe that we can continue to make a positive contribution to the United Kingdom rail market, delivering long-term customer benefits and sustainable returns for taxpayers and investors", Stagecoach CEO Martin Griffiths said.

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.

Mr Grayling told the Commons: 'I will terminate Virgin Trains East Coast's contract on June 24 2018.

"Despite today's news, we believe that we can continue to make a positive contribution to the United Kingdom rail market, delivering long-term customer benefits and sustainable returns for taxpayers and investors", he added.

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