Three times failed east coast franchise epitomises ‘broken model’

Passenger service contracts will replace franchises, with the planned Great British Railways body taking greater control, including over fares.

The east coast franchise has been back in public hands since 2018 when Virgin Trains East Coast became the third operator in 12 years to default on the deal.

The consortium, led by Perth-based Stagecoach, had agreed to pay £3.3 billion to run the service on the route made famous by the Flying Scotsman express between Edinburgh Waverley and London King’s Cross.

Virgin Trains East Coast defaulted on the franchise after bidding twice as much as two failed predecessors

That was twice as much two previous failed operators who had also been unable to keep up the repayments to the UK Government

GNER, which won the franchise after rail privatisation in 1996, handed back the keys on its £1.3bn contract in 2006, while successor National Express defaulted on its £1.4bn contract three years later.

The franchise, which also operates trains between Aberdeen, Inverness, Glasgow and London via Edinburgh, was also operated by the UK Government from 2009 to 2015 after the latter collapse.

The then Transport Secretary Chris Grayling said in 2018: "Stagecoach and Virgin Trains got their bid wrong and they are now paying a price."

But Commons’ public accounts committee chair Meg Hillier said: “The [UK] Government appears to have seen its task as simply to contract out the service, with wholly inadequate consideration given to passengers’ best interests and behaviour.

“This imbalance cannot continue.

"The franchising model is broken and passengers are paying the price.”

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