- Jack Taylor/Getty Images
- The government could be forced to renationalise the East Coast mainline rail service.
- Transport Secretary Chris Grayling is under pressure after announcing the Stagecoach-Virgin operated line was in “urgent” need of intervention.
- Stagecoach “got its numbers wrong,” Grayling told MPs.
- The service might be taken back into public hands for the second time in ten years.
LONDON – Theresa May’s government is facing the embarrassment of bringing one of the country’s main rail services back into public ownership just three years after they placed it in the hands of Virgin and Stagecoach.
Transport Secretary Chris Grayling announced on Monday that Stagecoach’s contract to run the London-Edinburgh East Coast Mainline services will cease much sooner than expected because the company “got its numbers wrong.”
The government is now examining the possibility of renationalising the line in what would be a major victory for Jeremy Corbyn’s Labour party, which is campaigning for Britain’s entire rail network to be brought into public ownership.
The line was nationalised by the last Labour government in 2009 and returned hundreds of millions of pounds to taxpayers until it was put back into private ownership by the coalition government.
Stagecoach and Virgin signed a contract to run the service from 2015 to 2023 and pay the UK government £3.3 billion to do so.
However, the franchise is now on the edge of collapse again, and Grayling and the rest of the government are facing the humiliation of considering taking the rail service back into public hands for the second time in a decade.
The transport secretary told the Commons on Monday that Stagecoach would also be walking away much sooner than planned, as the service’s future was “much more urgent” and changes were required in “the very near future.”
Stagecoach would continue to run the service for “a small number of months and no more,” the Conservative minister said told MPs. “The problem is that Stagecoach got its numbers wrong. It overbid and is now paying a price.”
What happens next?
This leaves the government with two options.
Firstly, it could allow Stagecoach to keep running the line on a short-term, not-for-profit basis until 2020 when a new private contract would be implemented.
Or secondly, it could choose to renationalise it, which would represent a political victory for the Labour Party and an embarrassing moment for the Department for Transport and rest of the government.
Labour leader Corbyn has vowed to renationalise the entire railway network if Labour forms the next government.
Grayling enraged opposition MPs on Monday by also announcing that Virgin and Stagecoach had been awarded an extension to their operation of the West Coast mainline service between London and Glasgow, despite being forced to pull out from the East Coast service as a result of their mismanagement.
Shadow transport secretary, Andy McDonald, accused the government’s railway policy of being in “chaos.”
“That Chris Grayling awarded a profitable contract to Virgin and Stagecoach on the West Coast while simultaneously confirming the same companies have collapsed on the East Coast shows Government policy is in chaos.
“This is yet another Tory handout to private shareholders at the public’s expense. Failing train companies should not be awarded future contracts, but this government is rewarding them for failure by extending their lucrative deal.”