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To: Chris Grayling
No Bailout for East Coast Rail Franchise
Hold Stagecoach/Virgin responsible for its financial obligations or ban it from securing future contracts.
Why is this important?
The only time this service ran successfully was while it was run by government after National Express handed it back after two years in 2009. In its five years as East Coast, the state-run firm returned a little more than £1bn in premiums, as well as several million in profits, to the Treasury. Detailed financial analysis from the Office of Rail Regulation shows it was one of two firms to make a net contribution to government coffers over the previous two years.
Now, history is repeating itself. Grayling is terminating the contract with Stagecoach/Virgin and releasing them from the £2bn worth of payments they were due to make between 2020 and 2023. Guess who will pick up this tab.
Not only that, but Stagecoach/Virgin will still be allowed to bid on future contracts.
I want Grayling to hold the franchisee to its obligations or bar them from future government bids.
Other private companies in other sectors have backed out of their contractual obligations with impunity if their contract is not profitable within a couple of years, and it is becoming a norm. Public services should not succeed or fail at the whim of private firms' accountants. It is the government's responsibility to consistently fund those services on which the public depends for its health, security, education, transport and energy.
If Grayling does not hold Stagecoach/Virgin responsible for its financial obligations or ban it from securing future contracts he should be sacked.