Government to take control of East Coast Main Line from Stagecoach Group

Exclusive: Government to 'renationalise' East Coast rail after string of failures

It will now be run by the Department for Transport (DfT) through an operator of last resort (OLR).

Transport Secretary Chris Grayling has admitted that the East Coast line will return to the "not-for-profit" London and North Eastern Railways, after just three years with Stagecoach and Virgin.

The decision to temporarily bring the line back into public ownership is politically embarrassing for the Government, which has repeatedly defended the private franchise model for the railways.

"Andy McDonald, Labour's shadow transport secretary, said Mr Grayling had "gifted" Stagecoach and Virgin a "£2bn bailout".

Britain will replace Stagecoach's East Coast rail franchise with a public-private partnership that will connect London with Edinburgh, transport minister Chris Grayling said on Wednesday, after he announced a renationalisation of the route.

GNER was stripped of the route in 2007 after its parent company, Sea Containers, suffered financial difficulties, while National Express withdrew in 2009.

He added that he has received "official advice" that restrictions should not be placed on Virgin and Stagecoach's "passport" which entitles them to bid for future rail franchises, as "there is no suggestion of either malpractice or malicious intent". We believe our plans offered a positive, value-for-money way forward for passengers, taxpayers and local communities, ensuring the continuation of the exciting transformation already underway on East Coast and a smooth transition to the government's new East Coast Partnership. "But my objective remains to move to a situation which leaves one single team operating the railway, with the simple goal of ensuring it continues the work that the existing operators have done in improving passenger services".

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The former transport secretary's called Grayling decision "indefensible" with the benefits only going to the "billionaire owners of these companies and their shareholders".

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"We've had reform, reform and reform".

While passenger numbers have increased dramatically, says The Times, "attempts to meet the challenge of extra demand has been thwarted by the limitations of the Victorian network", with a major multi-billion pound overhaul by Network Rail "having a catastrophic impact on punctuality". This is the situation we find ourselves in today.

Scottish Liberal Democrat transport spokesman Mike Rumbles MSP said: "Stagecoach failed spectacularly to deliver on its East Coast mainline rail contract, compromising one of Scotland's most important transport arteries". "[The Conservatives] are defending a broken system at the passengers expense".

Opposition MPs and labor unions seized on the decision as evidence that the Conservative government's franchise policy is failing. She said the committee would be examining the latest failure.

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