Labour Research January 2018


Union calls for inquiry into rail franchising

The RMT transport union has called for an immediate forensic inquiry into the sustainability of the government’s rail franchising programme after the bailout of the Virgin Trains East Coast (VTEC) franchise and warnings that First Group was making big losses on the Transpennine Express franchise. 

Transport secretary Chris Grayling announced in November that the VTEC franchise, a joint venture between Stagecoach and the Virgin Group, would be replaced in 2020 by a new public-private partnership. 

The contract had been due to run until 2023. The majority of the £3.3 billion in payments promised will be waived by the government. 

The franchise had been publicly run between 2009 and 2015 after previous franchises had failed. But despite making a surplus for government and recording high levels of customer satisfaction, it was auctioned off again in 2015. 

Former transport secretary Lord Adonis said Stagecoach and Virgin had overbid for the franchise and the Department of Transport had serious questions to answer. Adonis said that First Group had also overbid for the Transpennine Express franchise and that its lawyers were looking “very carefully” at the Stagecoach-Virgin bailout.

The RMT said the Transpennine Express franchise requires a massive increase in premium payments from £6.8 million in 2017-18 to £178.9 million by 2024-25. 

It said other franchises were also at risk due to over-optimistic projections of passenger growth.