The House of Commons transport committee has confirmed that it will hold an inquiry into the decision to end the East Coast Mainline rail franchise early, according to BBC News.
The Department for Transport has confirmed that Stagecoach and Virgin are to withdraw from running services in the next few months. Rail Minister Jo Johnson said that the companies had overbid for the contracts to run services.
Johnson told the BBC’s Today programme: “They overbid, it’s very simple and the department is looking very carefully into the bidding process to ensure there aren’t any incentives for bidders to overbid.”
Johnson added: “With any enterprise there is an element of risk. It is unrealistic to expect government to eliminate that altogether.”
The chair of the transport committee Lilian Greenwood said: “There are serious questions to be asked of the train operator, National Rail and ministers and the transport committee intends to ask them. The failure of the East Coast franchise has wider implications for rail franchising and the competitiveness of the current system. Lessons need to be learned by all concerned.
“In the meantime, the Department for Transport must take the right steps to protect passengers and taxpayers. Safeguards must be put in place to restore public confidence in the sustainability of our railways.”
In 2009, the East Coast Mainline franchise was returned to public ownership after being run by National Express. It was later re-privatised under a deal with Stagecoach and Virgin, who agreed to run services from 2015-2023, promising to pay the government £3.3bn for this opportunity. Stagecoach owns 90% of the joint venture, with Virgin owning 10%.