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Failed Virgin Trains East Coast franchise 'ran out of money'

Virgin Trains East Coast ran out of money. Credit: PA

A damning report by MPs has found the Virgin Trains East Coast franchise failed because they ran out of money.

The Transport Select Committee said the East Coast route, which includes Stevenage and Peterborough, made a profit and customer satisfaction was high.

However, Stagecoach and Virgin were stripped of the contract in June after just three years of operation.

Naivety, over-optimistic expectations and a mismanaged bid process all played a role in the failure of this franchise.

– Lilian Greenwood MP

The Chair of the Transport Committee, Lilian Greenwood MP, said: “Franchises should be able to withstand normal fluctuations in the economic cycle.

"Naivety, over-optimistic expectations and a mismanaged bid process all played a role in the failure of this franchise – the third in little over a decade.

“The Secretary of State pointed the finger at Stagecoach and Virgin for getting their bids wrong, but the Department is not blameless.

"Even now, there is no concrete plan, nor timescales, for the interim operator of this franchise."

Virgin Trains East Coast lost the franchise in June. Credit: PA

Lilian Greenwood added: "From our inquiry, we cannot be sure, and cannot reassure passengers or public, that the arrangements for the East Coast Partnership will more successfully overcome the systemic difficulties presented by the current set-up.

“Following the failure of the East Coast line, there is talk that the Prime Minister has ordered a major review of rail franchising – we await more details.

"However, if this or any other future Partnership arrangement is truly going to deliver a step-change in performance for the passenger, more fundamental reform of our railways is required.”