MPs to scrutinise failures of Stagecoach East Coast deal

An inquiry is being launched into the imminent failure of the East Coast rail franchise after it was revealed it would likely be defunct in a matter of months.

The transport committee is to investigate the reasons behind its failure and has said it would look at the best options to maintain services on the route. It comes after the transport secretary Chris Grayling, said that the Stagecoach/Virgin franchise would only be able to continue in its current form for a “very small number of months”. In oral evidence to the committee on 22 January, Grayling told the committee the reason the franchise had run into difficulties was "purely and simply about the revenue that it has received to date."

This will be the third collapse of a commercial franchise agreement on this part of the railway in just over ten years. The last time a commercial operator failed to meet its contractual obligations, in 2009, operations were taken back into public ownership, through Directly Operated Railways under the brand name East Coast Trains.

Lilian Greenwood, chair of the committee, said: "This failure – not once, but three times – has drawn criticism from all corners. 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."

Given the now imminent failure of the current franchise, the secretary of state has set out two options for the interim period to 2020, which include services to be taken "in-house" once more, and operated directly by the Department for Transport; or some form of "short-term" and "not-for-profit" arrangement with VTEC.

The transport committee is now inviting organisations and interested parties to come forward with any evidence which addresses the reasons for the failure of the current franchise agreement, the management of infrastructure works on the East Coast Mainline and the DfT’s readiness to act as an operator of last resort.

Views are sort through the Intercity East Coast rail franchise inquiry portal with the deadline for written submissions on Monday 26 March.

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