Arup will act as technical adviser to the government to set up an “operator of last resort” (OLR) as the InterCity East Coast Mainline franchise is brought under temporary state control.
The route is currently operated by Stagecoach and Virgin in a franchise which started on 1 March 2015 and was originally timetabled to run until 2023. This end date was revised in November last year, when it was brought forward to 2020.
Under the new plans, it will now be brought under the temporary control of an “operator of last resort” on the 24 June this year. Arup is acting as technical advisor to the Department of Transport (DfT) to set up this process.
In a statement made by transport secretary Chris Grayling, he stated that the route was not failing and it continued to generate “substantial” returns for the government. But he said Stagecoach and Virgin Trains had “got their bid wrong” and were now “paying the price”.
In a statement in February, Grayling indicated the current franchise would run out of money within months and it had lost nearly £200M meeting their contracted commitments.
In choosing to take the OLR option, Grayling said he wanted to make the “smoothest possible transition” to the creation of the new East Coast Partnership. This was in the long-term interests of passengers, he said.
In January, Transport Select Committee chair Lillian Greenwood wrote to Network Rail saying it could find no evidence of works by Network Rail promised, planned and subsequently delayed which would have affected the franchise owner from operating the route.
The letter was in response to claims made by Virgin and Stagecoach that delays to promised and planned infrastructure works, particularly those needed to bring the new intercity Express Programme (IEP) rolling stock into service, had been cited as root cause of its problems.
“In the interests of open and transparent scrutiny I feel it is important to shed light on this,” she said.
The route will now be rebranded as the London North Eastern Railway – LNER. An interim chair is expected to be appointed shortly.
Stagecoach said its understanding of the announcement was that it would not directly affect any other franchise bids or franchises it has an involvement in.
Stagecoach and Virgin are currently shortlisted for the new West Coast Partnership which comprises the West Coast Mainline franchise and the introduction of High Speed 2 services.
Stagecoach Group chief executive Martin Griffiths said it was “surprised and disappointed” that the DfT had chosen not to proceed with its proposals which it said offered a “positive, value-for-money way forward for passengers, taxpayers and local communities”. However he said it respected the Government’s decision.
“We will work constructively with the DfT and the OLR in the weeks ahead to ensure a professional transfer to the new arrangements, supporting our employees and maintaining the same clear focus on our customers as we have over the past three years.
“Today’s decision should not detract from the hard work and dedication of our people at Virgin Trains East Coast, who have been central to the transformation we have been delivering for our customers over the past three years. During that time, we have attracted more passengers, greatly increased investment, achieved industry leading customer satisfaction and made significant payments to the taxpayer to reinvest in public services.
“Despite today’s news, we believe that we can continue to make a positive contribution to the UK rail market, delivering long-term customer benefits and sustainable returns for taxpayers and investors.”
A Network Rail spokesperson said: “We will continue to work closely with the Department for Transport and rail operators to make sure we continue to offer the best possible service to passengers and freight companies during the transition period and as we move into the new public-private partnership.”
Virgin declined to comment further.