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UK Government To Nationalise East Coast Rail Service

UK Government To Nationalise East Coast Rail Service”

In a statement, a Network Rail spokesperson said: "We will continue to work closely with the DfT and rail operators to make sure we continue to offer the best possible service to passengers and freight companies during the transition period and as we move into the new public-private partnership".

Transport secretary Chris Grayling took the decision after the public accounts committee found last month that forecasts for passenger growth from the franchisees were "wildly wrong" and proved that rail franchising was a "broken model".

The network, which is run by Virgin Trains east coast, will be renamed the London North Eastern Railway (LNER) in a throwback to one of the big four railway companies created in the 1920s.

Mr Grayling said the decision had been "very finely balanced" between an operator of last resort and a new, non-profit contract for Vtec.

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But in view of the future integration of track and train operating companies (TOC) with the scheduled start of the East Coast Partnership in 2020, Grayling chose to "use the current difficulties" to ensure "the smoothest possible transition" and drive long-term plans.

But Virgin founder Richard Branson launched a staunch defence of the much-criticised Stagecoach/Virgin East Coast rail franchise "bailout" in January, claiming he and his partners had not "received a penny in dividends" and will in fact lose well over £100m.

It said yesterday it hoped to continue to play a role in Britain's rail network in the future.

Stagecoach, which owns 90% of Virgin Trains, has lost £259m from its involvement.

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"Deputy leader of City of York Council Andrew Waller said he would be writing to Mr Grayling immediately:to seek assurances and guarantees of stability for residents, commuters and workers in York".

Services were run by the DfT for six years up to VTEC taking over in 2015.

"When it is fully formed the new LNER operation will be a partnership between the public and private sectors", he said, while adding that the final structure remains to be determined.

The news marks the third intervention of this kind in a decade, with the contract terminating three years early - halfway through their contract. The pressure to avoid any further franchise collapse - or to see Stagecoach-Virgin emerge as operators again, with a diminishing market of bidders - could see the government struggle to get a new operator in place.

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There are also likely to be raised eyebrows that despite their failure, Virgin Stagecoach will still be able to bid to run the line again after it is transferred back into public private ownership in 2020. "But the organisations have paid a high financial and reputational price for what has happened".



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