The Government has veered away from a political row by picking two British companies to run the £3.3bn East Coast Main Line London-to-Scotland rail route, rather than the French State-owned joint venture that was widely presumed to have won.
However, the decision to hand the contract to a joint venture run by Stagecoach and Virgin Trains has provoked heavy criticism from those who claim the nationalised line, which the former operator National Express handed back to the Government in 2009, should remain under state ownership.
The Government’s selection means the transport giants will control all the train journeys between London and Scotland apart from the sleeper service, since Stagecoach and Virgin have controlled the West Coast Main Line since 1997.
But the Government has avoided the arguments that would have erupted had Eurostar and Keolis, both majority owned by the French State, secured the franchise.
The news comes a week after an Independent investigation revealed that foreign governments are making hundreds of millions of pounds a year running British public services. In the past two years alone, overseas taxpayers have taken dividends totalling nearly £1bn from transport, energy and utility companies that make their profits from UK households and passengers.
The East Coast service has generated £1bn for UK taxpayers since 2009, and Labour wants a rail company owned by the UK taxpayer to be able to compete for lucrative domestic contracts. Directly Operated Railways, which was set up to run the East Coast line, is not currently allowed to bid for franchises.
Len McCluskey, general secretary of the Unite union, said: “People will rightly ask why the Tory-led Coalition thought it was OK for the French Government to bid and run our railways, but not our own public sector, who got the East Coast back on track.”
The RMT union called the return of the franchise to the private sector “a national disgrace”. Its general secretary, Mick Cash, added: “This is pure industrial vandalism by a rotten Government hell-bent on wrecking successful public services in the name of private greed.”
The contract award is also another blow for FirstGroup, which was shortlisted for five franchises at the start of the year – including the Thameslink, ScotRail and Caledonian Sleeper networks – but has come away empty handed.
Shares in FirstGroup had already been hit by expectations that it would lose out, and yesterday rose 0.29p to 108.29p. Stagecoach, meanwhile, whose biggest investor is the Scottish tycoon Sir Brian Souter, saw its shares hit a record high as they climbed 30.4p to 400.4p.
The winning bidders, which will pay the Government £3.3bn for the contract, have promised to invest £140m in the route over eight years from next March.
They plan 3,100 extra seats for the morning peak by 2020 and to reduce journey times from London to Edinburgh by 13 minutes. They are also bringing 65 of the latest Intercity Express trains into service by 2018.
The route will be branded Virgin Trains East Coast despite Virgin owning just 10 per cent of Inter City Railways, the joint venture company. Stagecoach will own the rest.
The Transport Secretary, Patrick McLoughlin, claimed he had secured “a fantastic deal for passengers and for staff” and said the most expensive East Coast fares would be cut by 10 per cent.Reuse content