Written statement to Parliament

Rail franchising 27 November 2014

This speech was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Announcing the intention to award the Intercity East Coast rail passenger franchise to Inter City Railways Limited.

I am pleased to inform the House that following a rigorous competition I intend to award the Intercity East Coast franchise to Inter City Railways Limited, a joint venture between Stagecoach Transport Holdings Limited and Virgin Holdings Limited, pending the successful completion of a standstill period of at least 10 days.

This new franchise will run for 8 years from 1 March 2015 to 31 March 2023 with a further extension of 1 year callable at my discretion.

This is a significant step forward not just for this vital and historic route but for our whole transport system. Traffic on our railways has more than doubled since privatisation from 750 million to 1.6 billion journeys a year. With Network Rail we’re investing £38 billion in maintaining and improving the system. The new franchise will realise the benefits of this investment. It will be good for towns and cities up and down the east coast of England and Scotland, and good for our economy and jobs.

This franchise will provide over £140 million in investment for passengers:

  • faster journey times
  • new trains
  • more services
  • 50% more capacity
  • lower headline fares
  • free wi-fi
  • connects 5 towns that have never been connected to this franchise before

It provides strengthened services to the north of England, Scotland and Lincolnshire. We asked for transformation; our new partner will achieve this with what will be a renewed railway.

Stagecoach/Virgin have long term plans to build on the work done by the public sector operator and improve the franchise for passengers. Stagecoach/Virgin will also deliver for taxpayers by providing an improved premium of £3.3 billion (nominal) to government over the next 8 years.

The flexibility in our specification has allowed Stagecoach/Virgin to use its experience and put together a new timetable that not only continues service levels to every current mainline station but significantly enhances the levels of service.

Stagecoach/Virgin will strengthen the vital links from London to Scotland; all the way along the route as far as Aberdeen and Inverness. Passengers will benefit from regular, faster, more frequent cross border services to Falkirk, Stirling and Edinburgh, with journeys between London and Edinburgh regularly taking just 4 hours by May 2020.

England will also receive greatly improved services. By May 2020, Leeds will see regular journey times of 2 hours while Leeds, Bradford, Shipley, Harrogate and Horsforth will see more services each day when compared to the current timetable.

Sunderland, Middlesbrough, Thornaby, Huddersfield and Dewsbury, will all get services on InterCity East Coast for the first time as a result of this competition and Lincoln which gets just 1 train a day to London under the current operator will get one every 2 hours by May 2019 with the new operator.

All of these destinations will be served by the new Intercity Express Trains by May 2020. They will be built in the heart of the north east at the new plant in Newton Aycliffe. These trains will provide more reliable services, more seats and more leg and luggage space. The new operator will provide 50% more capacity across the InterCity East Coast and a 40% increase in morning peak seats to and from Kings Cross. Stagecoach/Virgin plan better catering with more staff on board trains to help passengers. They will not make passengers wait for the new trains to bring improvements. Stagecoach/Virgin will perform a major refurbishment of the existing fleet. This will bring them up to a high standard.

Stagecoach/Virgin plans to reduce some of the most expensive standard class fares on the franchise by up to 10% from May next year. Passengers will also have the chance to register to get automatic delay-repay payments at times of disruption and benefit from a loyalty and rewards scheme. Stations will see investment too with more car parking spaces, additional secure cycling facilities and electric vehicle charging points.

A benefits package worth £5 million will be available to all of its employees. Stagecoach/Virgin will invest heavily in skills, not just for their staff but for the railway as a whole. There will be a graduate programme and new apprenticeships, and the operator will create the National Academy for Rail Professional Education with bases in London, York and Derby. This will provide good training at a reduced cost; helping the whole of the industry by reducing the barriers to employment in it.

This award is further proof that private competition is good for passengers, local communities and taxpayers.