Chris Grayling should quit over rail franchise 'bailout', says Lord Adonis

Labour peer says handling of East Coast franchise makes Transport Secretary’s position ‘untenable’

Britain’s Transport Secretary, Chris Grayling (EPA)

Lord Adonis has called for Transport Secretary Chris Grayling to resign over what he claimed was a taxpayer-funded “bailout” of a multimillion-pound rail franchise.

The Labour peer, who quit as infrastructure tsar on Friday, said the decision to allow Virgin Trains East Coast to walk away early from a £3.3bn contract showed the Government’s running of the country had “essentially broken down in the face of Brexit”.

He predicted Mr Grayling’s position would “become untenable” because of the deal, which he said would lead to “a slashing of the national infrastructure programme and even bigger fare rises”.

Virgin Trains East Coast – a partnership between Stagecoach and Virgin – had previously agreed to pay the Government £3.3bn to run the service until 2023. A new East Coast Partnership will instead take on responsibility for both intercity trains and track operations on the route in 2020.

“Handing a cheque worth hundreds of millions of pounds to Richard Branson and [Stagecoach chair] Brian Souter would be indefensible at the best of times but we are now at the worst of times with a Brexit squeeze on the public finances and with rail fares going through the roof,” Lord Adonis told The Observer.

The former Transport Secretary added: “I think Chris Grayling’s position is going to become untenable. It is of a piece with him being a radical Brexiter to whom everything is subordinate to hard-right ideology.

“I think he is going to have to go because, as he is forced to defend a massive bailout to the private sector, the question will be asked by the public accounts committee and the National Audit Office – why didn’t you adopt the alternative course which was to set up state companies to avoid the need for a bailout? He has no answer to that.”

Lord Adonis stepped down as head of the National Infrastructure Commission on Friday with a scathing tirade of the Government’s management of Brexit. He later claimed the Government had been “trying to silence” his criticism of its handling of the East Coast franchise.

The Government has insisted the East Coast move was not a bailout.

A Department for Transport spokesperson said: “No one is getting a bailout and Virgin Stagecoach will continue to meet its financial commitments made on the East Coast rail franchise to the taxpayer, as it has done since 2015.

“Stagecoach has also – on average – paid 20 per cent more back to the taxpayer than when the line was operated by Directly Operated Rail and we continue to receive hundreds of millions of pounds.

“The decision to bring in a partnership to run the service from 2020 is to ensure the train companies work more closely with those responsible for the infrastructure like the track and signalling to help improve the service for passengers.

“Given Lord Adonis’s role with the National Infrastructure Committee, it is unacceptable for him to use his position to make statements that could mislead the public on other aspects of transport policy.”

The department declined to comment on Lord Adonis’s calls for Mr Grayling to resign when contacted by The Independent.