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Stagecoach sues Department of Transport over rail franchise snub

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The action could mean that Chris Grayling, the transport secretary, is called to give evidence in court.

It said that action would be extended to a judicial review of the decisions by Mr Grayling, which have barred Stagecoach from bidding to operate the trains on HS2 and on the Southeastern London commuter route.

It is understood that Arriva, the other train operator that lost out in the East Midlands tender to Abellio, the Dutch state railway group, may also take action against government.

The department said: “Stagecoach is an experienced bidder who [sic] knowingly submitted non-compliant bids on all competitions. In doing so, they disqualified themselves.

“We have total confidence in our franchise competition process and will robustly defend decisions that were taken fairly following a thorough and impartial evaluation process.”

The row has been festering since April 1, when Mr Grayling and senior civil servants chose Abellio to operate a new franchise between London St Pancras and the East Midlands, a service run by Stagecoach.

Nine days later, during which leaks from Whitehall are thought to have contributed to a sharp fall in Stagecoach’s share price, it emerged that Stagecoach had been disqualified because it had refused to take on open-ended railworker pension liabilities in the industry retirement scheme, which is reckoned to be £7.5 billion in deficit. It is understood that Arriva was disqualified for the same reason.

Stagecoach said that the decision effectively meant it was disbarred from any new franchise competitions. Stagecoach has been Britain’s biggest train company and is the joint venture operator with Sir Richard Branson of Virgin Trains on the west coast main line.

It was the operator of Virgin Trains East Coast into and out of London King’s Cross until a spat last year with the department resulted in it being sacked from the franchise and the network being renationalised.

Martin Griffiths, 53, Stagecoach’s chief executive, said: “We remain deeply concerned at the Department for Transport’s procurement of the three most recent rail franchise competitions and the rationale behind its decisions.

Despite our continued requests for full transparency around these matters, many fundamental questions remain unanswered. Regrettably we have had no option but to commence legal action against the DFT to ensure the serious issues involved and the DFT’s opaque decision-making are subject to proper public scrutiny.”

Stagecoach was involved in the last fiasco in train franchising in 2012, when the department awarded a new contract for the west coast main line to First Group against the Virgin-Stagecoach consortium, which had been operating it since privatisation in the 1990s. Virgin-Stagecoach launched a judicial review of that decision, only for the department to withdraw its decision after admitting that it had fouled up its calculations.



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