East Coast rail service to be renationalised after Virgin Trains and Stagecoach Group franchise is ended

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The troubled East Coast rail service is to be renationalised after current operators Stagecoach and Virgin could not meet payments.

The London to Edinburgh service, which runs through Peterborough, will be taken back into public control on June 24.

The move comes just over three years after Virgin Trains East Coast started running under a franchise of Virgin Trains and Stagecoach.

The new service will be rebranded as the London and North Eastern Railway.

Trains will be run by the Department for Transport (DfT) through an operator of last resort (OLR).

The announcement was made by Transport Secretary Chris Grayling in the House of Commmons.

He said: "I am creating a new board with an independent chair to oversee the operation of the LNER route and work with my Department on building the new partnership.

"It will have representatives of both the train operating team and Network Rail, as well as independent members who will importantly ensure the interests of other operators on the route are taken into account.

"I will appoint an interim chair shortly, and then begin the recruitment process for a long term appointment.

" When it is fully formed the new LNER operation will be a partnership between the public and private sectors.

"In all circumstances ownership of the infrastructure will remain in the public sector, but the railway is at its strongest when it is a genuine partnership between public and private."

Mr Grayling said: "In February, I gave the House an update on the financial problems on the East Coast Mainline, and indicated the current franchise would run out of money within months.

"This is not because the route is failing. It continues and will continue to generate substantial returns for the Government, and the most recent figures show passenger satisfaction at 92 per cent.

"The route has its challenges, but it is not a failing railway.

" Stagecoach and Virgin Trains got their bid wrong and they are now paying a price. They will have lost nearly £200 million meeting their contracted commitments.

" This means taxpayers have not lost out because revenues are lower than predicted: only VTEC and its parent companies have made losses at this time."

East of England MEP Alex Mayer said "Let’s hope this time the East Coast mainline is back in public hands for good.

“Three times in under a decade, private companies have failed on the East Coast. The line is only successful with public ownership, when it was the best-performing operator on the network.”

The East Coast was a successful public company between 2009 and 2014 returning over £1 billion to the Treasury.

Ms Mayer said: "We should take heed of other successful European models of rail ownership and I look forward to a Labour government which will bring all rail lines back under public control where they belong.”

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