Virgin Trains and Stagecoach win £3.3bn contract to run the East Coast mainline rail franchise

The RMT union described the deal as “a national disgrace”

Lucy Tobin
Thursday 27 November 2014 12:43 GMT

Stagecoach and Virgin Trains are set to cash in on one of Britain’s most lucrative railway contracts after ministers awarded the £3.3 billion, eight-year East Coast mainline contract to their joint venture.

The Government staved off one political row by rejecting the favourite — a joint bid by Eurostar and Keolis, both majority-owned by France.

But critics still condemned the move to re-privatisate the London-to-Scotland line by handing it to Stagecoach, led by Scottish tycoon Brian Souter, and Sir Richard Branson’s Virgin Trains.

The East Coast mainline has generated £1 billion for UK taxpayers since 2009, when former operator National Express handed the contract back to the Government.

The RMT union called returning the franchise to the private sector “a national disgrace”.

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.”

Len McCluskey, general secretary of the Unite union, condemned the “nakedly political decision to rush through the reprivatisation of the East Coast line before the general election.

People will rightly ask why the Tory-led coalition thought it was okay 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 contract award is another major blow for FirstGroup, which was shortlisted for five franchises at the beginning of the year but has come away empty handed.

Shares in FirstGroup had already been hit by expectations it would lose out, and today rose 1.4p to 109.4p. Stagecoach shot up more than 7 per cent to 396.4p. Virgin Trains is 51 per cent-owned by Stagecoach, and Branson’s firm has a 49 per cent stake.

The winning bidders have promised to invest £140 million in the route over eight years from next March, and pledge to pay the Government £3.3 billion for the contract.

It plans 3100 extra seats for the morning peak by 2020 and journey times from London to Edinburgh reduced by 13 minutes.

Transport Secretary Patrick McLoughlin claimed he had secured “a fantastic deal for passengers and for staff on this vital route”.

But critics pointed out today’s decision means Stagecoach and Virgin control all of the train journeys between London and Scotland — apart from Serco’s sleeper service — as Stagecoach and Virgin have been running the West Coast mainline between the two countries since 1997.

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