MPs launch inquiry into East Coast Mainline bidding process

Posted On: 
12th February 2018

A group of MPs have launched an inquiry into the failure of the East Coast Mainline franchise, which they say raises “serious questions” about the process of bidding for government contracts.

The East Coast Mainline will be run by Virgin and Stagecoach "for a few months more". The East Coast Mainline will be run by Virgin and Stagecoach "for a few months more".
Credit: 
PA

The Transport Select Committee announced the probe after it emerged private providers Stagecoach and Virgin were walking away from the contract early.

Lilian Greenwood, the chair of the Transport Committee, said the failure of the East Coast Mainline franchise has “wider implications” for the whole rail network.

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She explained: "There are serious questions to be asked of the train operator, Network Rail and ministers and the transport committee intends to ask them.

"The failure of the East Coast franchise has wider implications for rail franchising and the competitiveness of the current system. Lessons need to be learned by all concerned.

"In the meantime, the Department for Transport must take the right steps to protect passengers and taxpayers. Safeguards must be put in place to restore public confidence in the sustainability of our railways."

The East Coast Mainline was taken back into public ownership in 2009, before it was re-privatised in 2015 by Virgin and Stagecoach.

The two companies signed a deal to run the rail service from 2015 to 2023, after National Express handed it back to the Government in 2009.

Stagecoach and Virgin promised to pay the Government £3.3bn for the rights to the railway, with Stagecoach owning 90% and Virgin 10%.

However, last week Transport Secretary Chris Grayling announced the deal had fallen through as the two companies had overbid for the contract.

Mr Grayling told the Commons Stagecoach and Virgin would continue to run the London to Edinburgh line for "a small number of months and no more" after both companies “had gotten their numbers wrong”.

Rail Minister Jo Johnson also acknowledged the companies overbid for the right to run the service.

He told the BBC's Today programme: "They overbid, it's very simple and the department is looking very carefully into the bidding process to ensure there aren't any incentives for bidders to overbid."

The National Audit Office has already announced an investigation into the handling of the contracts.

A Stagecoach Group spokesman said: "Virgin Trains East Coast is a well-run, profitable railway and we are continuing to meet our contractual commitments, as we have done throughout the past 21 years in operating train services on behalf of the Government."