THE troubled East Coast Mainline rail service is to be renationalised after a franchise agreement with Virgin Trains was scrapped, Transport Secretary Chris Grayling has announced.The service is being brought back into public ownership after a string of failures by Stagecoach and Virgin in recent years.
It is not expected that any York based jobs will be directly affected by the announcement
Mr Grayling’s decision marks the third time in under a decade that ministers have had to intervene on the line which was privatised in 1996 when Great North Eastern Railway took the ill-fated franchise.
Stagecoach and Virgin have run the franchise on a 90:10 split since 2015 and had already announced they would be handing it back to the Government three years early after admitting they had overestimated passenger numbers and suffered a revenue shortfall.
In a statement to the MPs, Mr Grayling denied the East Coast line was a failing rail service but admitted Stagecoach and Virgin stood to lose around £200m.
He told MPs the Virgin Trains East Coast partnership would be terminated next month and a new operator of last resort would take control under the London and North Eastern Railways brand.
He said the new LNER service will be a partnership between public and private sectors.
Critics of denationalisation fear the collapse of the franchise will cost taxpayers hundreds of millions of pounds.
Mr Grayling said in February that the financial outlook for Stagecoach had rapidly deteriorated in recent months, with the company incurring losses of almost £200m.
The renationalisation of the line is expected to last for the next two years.
After 2020 the expectation is for the East Coast mainline to be operated on a new “public-private partnership model”.