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Train firm sues over West Coast line decision

Train operator Stagecoach, which owns the majority of the Virgin trains operation on the West Coast Main Line, is taking the government to court over its disqualification from running services on the route from 2020.

Virgin train
Getty Images

Stagecoach and its partners were barred from running three franchises by the Department for Transport last month.

It is a move that could mean the end of the distinctive trains that have run on the line since the franchise system was brought in during the 1990s.

The government disallowed the bids because they did not meet pensions rules, but the Stagecoach claim alleges the DfT breached its statutory duties, which include a "fair" tendering process.

Stagecoach taking legal action against DfT

Stagecoach train
Stagecoach is already disqualified from re-bidding on the East Midlands franchise

Stagecoach Group, along with partners SNCF and Virgin, is taking legal action against the Department for Transport (DfT) in connection with the procurement of the West Coast Partnership franchise.

A claim has been issued at the High Court in London, alleging the DfT breached its statutory duties in connection with competition for the franchise.

The claim has been brought by West Coast Trains Partnership Limited, in which Stagecoach has a 50% share, with SNCF holding 30% and Virgin 20%.

It follows another legal action by Stagecoach last month, after the DfT disqualified the firm from bidding to run trains in future on the East Midlands franchise, a service which it currently operates.

The legal action follows a decision by the DfT to disqualify Stagecoach and its partners from the East Midlands, West Coast Partnership and South Eastern franchise competitions.

'Real disaster'

Today Programme

BBC Radio 4


Richard Bowker, former head of the Strategic Rail Authority, has been speaking to BBC Radio 4's Today Programme following the decision by Stagecoach to take the government to court after it was barred from rebidding for East Midlands railway franchise.

It was because of a dispute over pensions and Mr Bowker said it illustrated that the public sector was not able to manage to risk.

"The real disaster is we've ended up in a position where two of the Britain's... best, most experienced and most innovative... train operators are excluded from a market at precisely the time when that is the worst possible outcome for the government," he said.

The other train operator he referred to was Virgin Trains which is 49% owned by Stagecoach, and had been bidding to renew the West Coast franchise.

Stagecoach fights back on pensions


Stagecoach, which owns 49% of Virgin Trains, says it faced pensions risks of "well in excess" of £1bn for retail franchises it was bidding to operate.

This is after it was barred from three rail franchise bids - East Midlands, South Eastern and West Coast Partnership - last month when the Department for Transport (DfT) disallowed the bids because they did not meet pensions rules.

It a stock exchange announcement today, Stagecoach said a senior Department for Transport official "verbally advised that we had been excluded from all three competitions for submitting non-compliant bids, principally in respect of pensions risk".

"In our bids, we refused to accept the potential pension risks that the Department for Transport requires operators to bear in relation to the three new franchises.

"The full extent of these risks is unknown, but we estimate them to be well in excess of £1bn for the three franchises".