Published: Thu, May 17, 2018
Global Media | By Garry Long

UK's East Coast rail renationalized as privatization fight continues

UK's East Coast rail renationalized as privatization fight continues

It will now be run by the Department for Transport (DfT) through an operator of last resort (OLR).

In response to Grayling's statement in the Commons, Labour's Jenny Chapman challenged him to say "My name's Chris Grayling and I've just renationalised a railway".

Grayling plans to terminate Virgin Trains East Coast's contract on 24th June this year and on the same day start a new partnership, recreating the London North Eastern Railway.

Transport Minister Chris Grayling tried to appeal to both parties on Wednesday with a promise that after a spell under government control, he would set up a new "partnership between the public and private sectors" to run the line.

But when in private hands it failed not once, but three times, and the government has had to bail out the franchise once again.

Stagecoach confirmed that negotiations had been under way over a new direct award to replace the present franchise, which began in March 2015 and should have run until 2023.

Grayling said: "The route continues to generate substantial returns for the government".

Stagecoach Group Chief Executive Martin Griffiths said that while the company was "surprised and disappointed" at the government's decision not to allow it to continue running the ICED franchise under a revised contractual arrangement, it "respected" the decision.

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Transport groups underlined a point made by the government - that with 92 per cent passenger satisfaction scores, East Coast services are some of the best-rated by users.

But the private operators have since complained of losing money on the line between London and Edinburgh.

Shadow Chancellor John McDonnell said he is pleased to see Grayling "implementing first stage of Labour's Manifesto promise to renationalise the railways" following the announcement, and echoed Caroline Lucas's appeals for public ownership to be extended across the entire network.

He added that the firms operating the franchise, which is held under a joint venture between Stagecoach and Virgin owning 90% and 10% respectively, "will have lost almost £200mln" but this had not been a loss to taxpayers "at this time".

The contract with Virgin Trains East Coast which began only in 2015 will end on 24 June 2018 when the government will recreate what the Transport Minister described as one of Britain's iconic rail brands, the London North Eastern Railway (LNER) thus reinstating what was in place nearly 100 years ago in 1921.

The government has said that it does not intend to strip Virgin and Stagecoach of the franchising passports which they hold, and thus they would be able to bid for future franchises.

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

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