Chris Grayling announces urgent renationalisation of troubled East Coast rail line

Posted On: 
16th May 2018

The troubled East Coast rail line will be taken back into public hands, the Transport Secretary has announced today.

Transport Secretary Chris Grayling today announced that the East Coast rail franchise would be taken over by an 'operator of last resort'
PA Images

Chris Grayling told MPs an “operator of last resort” would take over the franchise from Virgin Trains East Coast, which is 90% owned by Stagecoach.

In a statement to the House he said: “Stagecoach and Virgin trains got their bid wrong and they are now paying a price. They will have lost nearly £200 million meeting their contracted commitment.”  

MPs launch inquiry into East Coast Mainline bidding process

Government may be forced to take over East Coast rail franchise, Chris Grayling admits

Andy McDonald MP: Rail announcement masks reality of another bailout on East Coast mainline

He added that the government takeover next month would pave the way for the launch of a new public-private partnership with London and North Eastern Railway.  

VTEC was contracted to run the line from 2015 to 2023, for which they promised to pay the Government £3.3bn.

But the deal was thrown into turmoil when it was revealed that the firm had overbid for the contract and could not afford to keep running it.

Mr Grayling today reassured passengers and staff that the changeover would not affect services or employment terms.

He added that the move showed the Government was “willing to take tough decisions when necessary to ensure that we build a stronger fairer economy for all”.  

The franchise has caused encountered numerous problems over recent years and was previously taken back into public hands in 2009 after a series of botched deals with private operators.

Shadow Transport Secretary Andy McDonald blasted: “Three times in under a decade private companies have failed on the East Coast. Its only successful period was 2009-2015 under public ownership when a billion pounds was returned to the Treasury…

“The government’s incompetence has been a disaster for passengers and lead to misery for millions.”  

Chair of the Transport Committee, Lilian Greenwood, said:

“Three times in less than a decade, the Government has been forced to intervene in the East Coast rail franchise. It is a very sorry tale.

“Let the Secretary of State be in no doubt – my Committee will be looking closely that what has happened, the choices he made in the run up to this decision and his plans for a new partnership. It is important that the Secretary of State is held to account not just for his policies but his implementation of them.

“The Secretary of State promised that he would publish a full appraisal of the options assessed. I look forward to seeing this as soon as possible and we will look at the Department’s analysis very carefully. I am sure the National Audit Office will want to build on the work it has done in this area to ensure this deal represent the best value to the tax-payer.

“It is vital that the Department reassures passengers that the arrangements it has put in place today will ensure service levels are maintained.”