In oral evidence to the Committee on 22 January 2018, the Secretary of State told the Committee that the reason the franchise had run into difficulties was "purely and simply about the revenue that it has received to date."
On 5 February, the Secretary of State for Transport announced that the Intercity East Coast rail franchise, operated by Virgin Trains East Coast (VTEC) since March 2015 in a commercial agreement due to run until 2023, was likely to fail within "a very small number of months."
Third collapse of franchise agreement for this part of railway
This will be the third collapse of a commercial franchise agreement on this part of the railway in just over ten years.
The last time a commercial operator failed to meet its contractual obligations, in 2009, operations were taken back into public ownership, through Directly Operated Railways under the brand name East Coast Trains.
Lilian Greenwood MP, Chair of the Committee, said:
"This failure – not once, but three times – has drawn criticism from all corners.
There are serious questions to be asked of the train operator, Network Rail and Ministers and the Transport Committee intends to ask them. The failure of the East Coast franchise has wider implications for rail franchising and the competitiveness of the current system. Lessons need to be learned by all concerned.
In the meantime, the Department for Transport must take the right steps to protect passengers and taxpayers. Safeguards must be put in place to restore public confidence in the sustainability of our railways."
A public/private agreement to replace the current contract
The Secretary of State had already announced, in November 2017, that the current contract was unlikely to run its full course to 2023. His proposal was, and remains, to replace it with a new type of public/private agreement—bringing together public infrastructure owner and private train operator—the East Coast Partnership, from 2020.
Given the now imminent failure of the current franchise, the Secretary of State has set out two options for the interim period to 2020:
- services to be taken "in-house" once more, and operated directly by the Department for Transport; or
- some form of "short-term" and "not-for-profit" arrangement with VTEC
Focus of the inquiry
The Committee’s inquiry examines the lessons to be learned from this and previous franchise failures on this part of the network; the best way forward in the short and longer term; and the wider implications for the rail franchising system.
Submit your views
The Committee is particularly interested to receive evidence addressing:
- the reasons for the failure of the current franchise agreement, lessons learnt from previous failures of franchises on the East Coast Mainline and the steps the Department for Transport needs to take to guard against future failures;
- the management of infrastructure works on the East Coast Mainline, including the relationships between the Department’s aspirations for the franchise, the operators’ obligations in the franchise agreement and planned Network Rail infrastructure works;
- the Department’s contingency plans, particularly the steps it is taking to minimise risk to passengers and taxpayers;
- the readiness of the Department to act as an operator of last resort;
- the feasibility of the Department’s proposal to establish a public/private East Coast Partnership, to be operational by 2020; and
- the wider implications for rail franchising of the failure of the East Coast franchise, including for the competitiveness of the system.
Submit your views through the Intercity East Coast rail franchise inquiry portal.
Deadline for written submissions is Monday 26 March 2018.