Train services on the railway which connects Yorkshire cities with London and Edinburgh will be renationalised within weeks following the termination of the Virgin Trains East Coast (VTEC) franchise, Transport Secretary Chris Grayling has announced.
From June 24, trains on the East Coast Main Line will be run by the Department for Transport (DfT) under an Operator of Last Resort provided by a group of private companies under the historic London and North Eastern Railway (LNER) banner.
Mr Grayling stressed there would be no changes for passengers apart from the livery on the trains.
The dramatic move was seized on by Labour as evidence that their policy of nationalising Britain’s railways had been vindicated, with several MPs in the Commons chiding Mr Grayling to say he had “renationalised a railway”.
But Mr Grayling told MPs stressed that he would stick to a commitment to turn the railway into a public-private partnership in 2020.
Critics claim the decision to end the £3.3 billion contract early is a “bailout”, but Mr Grayling insisted that “taxpayers have not lost out” and it is only the private firms that have “made losses at this time”.
The Transport Secretary said Virgin and Stagecoach had “got their bid wrong” in 2014 and were now “paying the price”, losing nearly £200m in meeting their contracted commitments.
But he sparked anger among Yorkshire MPs after allowing Virgin and Stagecoach, which jointly ran the line, to continue bidding for future rail franchises, leaving open the possibility that they could bid for a return to the line.
Labour former Transport Secretary Lord Adonis backed Mr Grayling’s move and said the new public operator should be allowed to bid for future contracts so the railway could potentially stay nationalised beyond 2020.
He told The Yorkshire Post: “I’m glad that it’s been nationalised because it would have been completely wrong to reward a failing private company.
“The East Coast state company was a huge success until it was abolished by the present Government and this gives us a chance to resurrect it and I hope it leads to a better deal for the travelling public and the staff.”
And he said Mr Grayling was right not to strip Virgin and Stagecoach of their passport to bid for franchises and said they would find it hard to win contracts in the future anyway due to the “severe damage” done by this collapse.
“The fact of the matter is they haven’t got this contract so clearly they’re not in a great position to get future contracts either having walked away from £2bn-worth of commitments to the taxpayer,” he said.
“And the Government wouldn’t have had a legal position to take away their existing franchises, I know that because I have been there myself.”
Several Yorkshire MPs spoke in during Mr Grayling’s statement on a line which is vital for transport in the region.
Labour MP for Leeds Central Hilary Benn poked fun at Mr Grayling, an opponent of public ownership, saying he “could have made a considerably shorter statement if he’d just got up and said ‘for the time being I am re-nationalising the East Coast Main Line’.”
Labour former minister and Don Valley MP Caroline Flint called on the Government to block future bids for rail franchises from Virgin and Stagecoach - a suggestion which was rebuffed by Mr Grayling.
Ms Flint said: “Shouldn’t there be a consequence from this and Virgin and Stagecoach should be denied bidding for other franchises?”
Labour MP for Bradford South Judith Cummins said the whole saga “smacks of a pattern of failure and incompetence” and Mr Grayling as Transport Secretary “should take responsibility”.
VTEC is the third private operator to fail to complete the full length of a contract to run services on the East Coast route.
GNER was stripped of the route in 2007 after its parent company suffered financial difficulties, while National Express withdrew in 2009.
Services were run by the DfT for six years up to VTEC taking over in 2015.