UNITED KINGDOM
The UK Department for Transport is to take over the running of a major rail company after the current private operator, Virgin Trains East Coast (VTEC) failed to meet its financial commitments.
Secretary for Transport, Chris Grayling took the decision after PS staff completed a review of two options for the future of the line: allowing the current franchisee, a joint venture between Virgin Group and transport giant Stagecoach, to continue operating on a not-for-profit basis until 2020, or for the Department to take over operations.
Mr Grayling said the officials had concluded neither option was obviously superior, but he had taken the decision to nationalise the line to ensure a smooth transition to the new partnership arrangement between franchise operators and state-owned infrastructure firm Network Rail in 2020.
“This partnership is intended to improve efficiency by allowing infrastructure and train operators to work closer together,” Mr Grayling said.
“Given the finely balanced judgement, I have taken into account broader considerations and decided to use the current difficulties to drive our long-term plans for the East Coast Partnership.”
VTEC had pledged to pay £3.3 billion (A$5.8 billion) to run the franchise until 2023 and, although it had made all its payments to date, it had lost nearly £200 million (A$354 million) doing so.
The nationalised service will be renamed the London North Eastern Railway — reviving an iconic rail brand that Mr Grayling said would continue once the new partnership was in place.
London, 18 May 2018
