Stagecoach demands answers from Grayling over exclusion from train franchise bidding

The company has written to the Department for Transport (DfT) demanding an explanation as to why its bid was deemed “non-compliant”.

The DfT’s decision to award the East Midlands Railway contract to Abellio from August means that three out of five train journeys in Britain will be on services run by foreign companies or governments.

The Stagecoach Group, which currently operates the East Midlands route, learned last week that it would be disqualified from bidding for two other franchises – a decision that will kill off the Virgin Trains brand in Britain.

Sir Richard Branson’s company has run the west coast main line route since 1997 in partnership with Stagecoach. A row over railway pensions is behind Stagecoach’s removal from the process.

The Pensions Regulator has said that up to £6bn may be needed to plug a funding deficit, but train companies insist the money should come from the taxpayer.

The Stagecoach chief executive, Martin Griffiths, said last week that his company was “extremely concerned” at the Department for Transport’s latest decision and its timing.

A Stagecoach Group spokesman said: “We can confirm we have written to the Department for Transport seeking answers to the numerous legitimate questions many people have about their decision.

The spokesman added: “We expect a prompt, full and transparent response to help restore public confidence in the integrity of the Government’s procurement process, which has been badly shaken by this and other recent events.”

A DfT spokesman said: “Stagecoach is an experienced bidder and fully aware of the rules of franchise competitions.

“It is regrettable that they submitted non-compliant bids for all current competitions which breached established rules and, in doing so, they are responsible for their own disqualification.

“Stagecoach chose to propose significant changes to the commercial terms for the East Midlands, West Coast Partnership and South Eastern contracts, leading to bids which proposed a significantly different deal to the ones on offer.

“We have total confidence in our process. We have awarded the East Midlands franchise to Abellio after they presented a strong, compliant bid.

“Stagecoach have played an important role in our railways and we hope they will continue to do so post the conclusions of the rail review.

The spokesman added: “However, it is entirely for Stagecoach and their bidding partners to explain why they decided to repeatedly ignore established rules by rejecting the commercial terms on offer.”

The Department for Transport wants the Pensions Regulator to be satisfied that the train operator pension risks are managed appropriately, the DfT spokesman said.

The Government wants the train operator sections of the Railway Pension Scheme (RPS) to be fair, affordable and sustainable for a diverse range of employees, employers, the taxpayer and farepayers, the spokesman added.

The Pensions Regulator is the Government regulator of occupational work based pension schemes. It is operated by, but independent from, the Department for Work and Pensions.