The Government’s plans to return a key London to Scotland rail route through Peterborough to the private sector after five years of public sector operation have hit a major problem.
Inter City Railways Ltd (ICRL), a subsidiary jointly owned by Stagecoach and Virgin Trains, is due to take over the East Coast franchise on March 1.
But the Competition and Markets Authority (CMA) has said competition could potentially be reduced on sections of the East Coast line on which Stagecoach already operate.
Sections between Peterborough and Grantham and between Peterborough and Lincoln overlap with East Midlands Trains services operated by Stagecoach. The CMA said that on both of these overlapping rail services there was no other rail operator and only a minimal coach service.
It added that there was also an overlap of East Coast rail services with Citylink coach services, which are operated and jointly owned by Stagecoach, between Edinburgh and Dundee as well as between Edinburgh and Aberdeen.
The only competing public transport services are provided by ScotRail and Arriva Cross Country, the CMA said.
It added that it had found that there was “a realistic prospect that the award of the East Coast franchise to ICRL would lead to higher fares or reduced service quality for rail passengers travelling on these overlapping routes”.
The CMA said ICRL now had the opportunity to offer undertakings to resolve the competition concerns identified by the CMA within five working days after receiving the CMA’s reasons for its decision. The CMA has until February 20 to decide whether these might be acceptable as a suitable remedy..
East Coast has been run under the control of the Department for Transport since late 2009 following National Express’s withdrawal. Labour and rail unions have accused the present Government of rushing through the new franchise to get the re-privatisation through before the general election.
Shadow transport secretary Michael Dugher said tonight: “This is extremely embarrassing for the Government and demonstrates once again that the whole rushed franchise process should never have happened.
“David Cameron put privatisation ahead of the public interest when he decided to re-privatise the line.
“Labour has called for a wholesale review of the franchise process. A different approach is needed - one that puts the public interest first, reverses the presumption against the public sector and properly stands up for passengers.”
“Stagecoach notes that the CMA has identified limited issues. The company will study the detail of the CMA’s review decision and work constructively with the authority to address the issues raised with a view to running services under the Virgin Trains East Coast brand as planned from 1 March 2015.”