Rail franchise claim in court

Train firms step up legal action in disqualification row

Virgin Azuma

Rail firms are demanding the restoration of confidence in the franchise system


Stagecoach Group has joined Virgin and French state railway company SNCF in a legal action against the Department for Transport over their exclusion from bidding for the West Coast franchise.

A claim has been issued at the High Court in London together with a judicial review claim that the DfT breached its statutory duties.

The claim has been brought by West Coast Trains Partnership, in which Stagecoach has a 50% share, with SNCF holding 30% and Virgin 20%.

Stagecoach is already pursuing action the DfT in relation to the East Midlands rail franchise which was awarded to Abellio.

The legal action follows a decision by the DfT in April to disqualify Stagecoach and its partners from the East Midlands, West Coast Partnership and South Eastern franchise competitions.

In a statement today, Stagecoach said the claims vary in certain respects but common to both is its “refusal to accept the pension risks that the DfT requires operators to bear in relation to the new franchises”.

Martin Griffiths, Stagecoach chief executive, said: “We believe the rail system should be about appointing the best operator for customers, not about passing unquantifiable, unmanageable and inappropriate risk to train companies.

“It is disappointing that we have had to resort to court action to find out the truth around the DfT’s decision-making process in each of these competitions. However, we hope court scrutiny will shine a light on the franchising process and help restore both public and investor confidence in the country’s rail system.”

Guillaume Pepy, SNCF executive board chairman, said: “We are disappointed at how the DfT has handled the procurement process for the West Coast Partnership franchise. We strongly believe rail franchises should be let on a sustainable basis to those operators who offer the best services, the best trains, and the best customer experience in a cost-efficient manner.”

Patrick McCall, senior partner at Virgin Group, said: “It is extremely frustrating that the reason our bid was disqualified has nothing to do with looking after passengers or running a good train service. Virgin Trains consistently tops independent customer satisfaction tables for long-distance franchises thanks to our continued focus on innovation and customer experience, and our fantastic people.

“Dubbed ‘mission impossible’ when we first started, we’ve created a successful business which has paid almost a billion pounds to taxpayers in the last five years alone. We’ve continued to lead the industry with initiatives like automatic delay repay and scrapping the Friday evening peak fares.

“The DfT has ignored this track record and instead focused on which bidder is reckless enough to take on various unquantifiable risks, such as pensions.”

Andy McDonald, Labour’s Shadow Transport Secretary, said: “Transport Secretary Chris Grayling’s oversight of departmental procurement gets worse with each passing week.

“The news that four transport groups are now taking legal action against his department over its handling of two rail franchising processes shows that this system is beyond reform. It is failing on its own terms but Chris Grayling refuses to see it.

“Labour’s plans to bring track and trains together under one public company will deliver the affordable fares and reliable rail services passengers desperately need and deserve.”

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