A joint venture between Stagecoach and Sir Richard Branson’s Virgin Group that won the East Coast Main Line franchise has been hailed a “fantastic deal for passengers” – and condemned as a “national disgrace.”
The two companies, to be known as Inter City Railways, have paid £3.3bn to the Government to secure the bid, returning the route from Edinburgh to London to the private sector.
They have pledged to invest £140m in the service over the eight years of the franchise.
Politicians have described the privatisation move as a “real shame” while the RMT union secretary Mick Cash said it was “a national disgrace and an act of utter betrayal” after the publicly-owned Directly Operated Railways (DOR) brought the line back into profit after it took the reins in 2009.
Transport Secretary Patrick McLoughlin said the contract was “a fantastic deal for passengers” and that Virgin and Stagecoach, who already run the West Coast line, have a major investment strategy.
It could mean more services from Newcastle to London and direct links to Sunderland and Middlesbrough.
Mr McLoughlin said: “This is a fantastic deal for passengers and for staff on this vital route. It gives passengers more seats, more services and new trains.
“We are putting passengers at the heart of the service. I believe Stagecoach and Virgin will not only deliver for customers but also for the British taxpayer.
“This government knows the importance of our railways. That is why they are a vital part of our long term economic plan, with over £38bn being spent on the network over the next five years.”
Durham City MP Roberta Blackman Woods said the Coalition ignored the campaign to keep East Coast Main Line public.
She said: “It’s a real shame that the Government have ignored the wishes of local people and have taken a public sector operator out of the rail franchise system. East Coast as a public sector company was driving up standards throughout the sector and this valuable expertise will now be lost.
“In the past, private companies have promised a lot to secure contracts but have not been able to deliver in practice, and I hope we do not experience the same decline in standards as has happened with private companies previously.”
Rail Minister Claire Perry, however, said DOR was set up as a temporary measure, adding: “It hasn’t been able to invest, but from a customer service point of view, it has been a great success.
“The staff I’ve talked to are really engaged and excited about working for this new company because they know they can build on that and do better.
“DOR was never set up for the long term, and it is interesting when people talk about this being about ideology, but the last Labour government had 13 years to change the franchising of it and it didn’t.
“So what was right then is apparently wrong now.”
Mick Cash, however, said: “The government has confirmed that it is bulldozing ahead with the re-privatisation of the East Coast Main Line despite all the figures showing that the current public sector operator is handing over a billion pounds back to the British people while delivering huge improvements in service and customer satisfaction.”
Len McCluskey, the Unite general secretary, added: “This nakedly-political decision to rush through this reprivatisation before the general election is a betrayal of the tax-payers and staff who have made East Coast a success.
“Rail privatisation has spectacularly failed both taxpayers and the travelling public. Rather than one that has glued itself to a failed dogma, we need a government that puts the people and our national bank balance first.”
National Express, who ran the line before DOR, ran into financial difficulties, forcing the Government to intervene.
Other companies bidding to win the franchise included FirstGroup and a joint venture between Eurostar and French firm Keolis.