East Coast rail services to be taken into public control

A Virgin train at York station

But Stagecoach reported losses on the line and in November a year ago Grayling announced that the franchise would be terminated in 2020 and become a public-private railway.

(90%) and Virgin (10%) - was awarded the franchise to run trains between London King's Cross and Edinburgh for eight years in 2014.

"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".

In February Mr Grayling said the franchise would only be able to continue in its current form for a "very small number of months" as Stagecoach had "got its numbers wrong" and "overbid".

Those companies have run the lines on a for-profit basis, but the government has been forced to step in when those contracts have failed, and the government-owned Directly Operated Railways ran the East Coast service from 2009-2015.

Chris Grayling on a visit to York last week
Chris Grayling on a visit to York last week

Vtec had struggled to repay the £3.3 billion it bid to run the franchise - twice as much as its two private sector predecessors, GNER and National Express, which defaulted on their contracts.

It is the third time since 2007 that the 393-mile (632 km) route has been returned to government hands, highlighting the difficulties for private companies of accurately bidding to run services on the privatized train network.

The service will be taken back into public control on June 24, a little over three years since Virgin Trains East Coast started running.

Stagecoach's chief executive Martin Griffiths estimated the company's total losses at £260m, in February.

He added: "However, we respect the Government's decision". We believe our plans offered a positive, value-for-money way forward for passengers, taxpayers and local communities, ensuring the continuation of the exciting transformation already under way on East Coast and a smooth transition to the Government's new East Coast Partnership. During that time, we have attracted more passengers, greatly increased investment, achieved industry leading customer satisfaction and made significant payments to the taxpayer to reinvest in public services.

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