East Coast Rail Franchise – Strange Rumours but a Clear Winner

The appointment of the Stagecoach / Virgin consortium to run the UK's East Coast railway line last week was not a total surprise, and it sounds like it may have been a relatively easy decision. Reports suggest that the winning team offered a significantly greater return to the taxpayer over the eight years of the franchise – some £3.3 billion according to the Transport Minister. And good news for my home town of Sunderland according to the Guardian.

The Department for Transport said the franchise award would lead to 23 new services from London, including plans for direct links to Huddersfield, Sunderland and Middlesbrough, and more daily services on the route.

Seat capacity will increase by 50%, with 65 new Intercity Express trains brought into service from 2018, cutting journey times from London to Edinburgh by 13 minutes.

The one strange factor in the process was the publication of stories by a number of newspapers earlier last week, before the announcement on Thursday, suggesting that the winner was going to be the Keolis and Eurostar consortium, controlled by the French state-owned railway, SNCF. That obviously proved to be about as accurate a story as those old Sunday Sport headlines (“World War Two Bomber Found On Moon”).

But where did the tale come from? An overly optimistic senior manager, celebrating prematurely in a Fleet Street hostelry? A rumour spread by someone in the City, or in the Department for Transport just for fun? A pure piece of kite-flying (i.e. guesswork) by a journalist? Interesting, if only that we don't normally see this before contracts are awarded. Or maybe it looked like the French would win until a politician said "we're not giving the contract to a f****g French firm"!

If Keolis had offered more than Stagecoach, that might be a credible theory, but the size of the commercial winning margin, rumoured to be the best part of £1 billion, suggests that there was a clear winner. First Group also lost out, extending their run of failure in terms of attempting to win rail franchises.

However, everyone involved will be holding their breath for another week, until the end of the mandatory standstill period, during which time a failed bidder could issue a complaint or challenge. But again, it is unlikely that any challenge would succeed if the commercial side is clear cut - unless there has been some huge and obvious cock-up in the process. And after West Coast fiasco of 2011/12, surely that won't happen again.

The trade unions and the Labour Party believe that the current state-owned company that has been running the franchise, Directly Operated Railways, should have been given a chance to bid. The route between London and Edinburgh has been publicly run since 2009, after previous operator National Express ran into difficulties and gave up the contract. But it looks like Stagecoach / Virgin are clear winners, there probably won’t be a challenge, we suspect, and all they have to do now is to get the trains to run on time!

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