On the go: Stagecoach started the second wave of its legal action against the Department for Transport on Friday, claiming it was illegally excluded from three rail franchise contests in April over pensions liabilities.
DfT now faces legal challenges on multiple fronts, raising questions about whether the UK’s railways procurement process is fit for purpose.
Stagecoach has issued two claims at the High Court: today, over exclusion from contesting the West Coast line; and on May 8, over exclusion from contesting the East Coast line, which it currently operates. German company Arriva began separate legal action against the UK government this month.
Martin Griffiths, Stagecoach’s chief executive, said: “We hope court scrutiny will shine a light on the franchising process and help restore both public and investor confidence in the country’s rail system.”
Stagecoach and its partners allege that DfT breached its statutory duties during procurement.
We hope court scrutiny will shine a light on the franchising process and help restore both public and investor confidence in the country’s rail system
Martin Griffiths, Stagecoach
The claim has been brought by West Coast Trains Partnership Limited, with Stagecoach holding a 50 per cent share, the Société Nationale des Chemins de fer Français 30 per cent and Virgin 20 per cent.
Stagecoach said it was excluded for refusing to take on pension liabilities of £1.6bn.
Patrick McCall, senior partner at Virgin, said: “The DfT has ignored [our] track record and instead focused on which bidder is reckless enough to take on various unquantifiable risks, such as pensions.”
The industry-wide Railways Pension Scheme has a potential funding gap of £7.5bn, according to reports of a leaked letter from the Pensions Regulator.
A DfT spokesperson responded: “Stagecoach is an experienced bidder which knowingly submitted non-compliant bids on all competitions. In doing so, they disqualified themselves.”
The spokesperson underlined there was no issue with the railway procurement process. “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.”
