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Stagecoach and partners launch legal action over West Coast rail franchise

By Josh White

Date: Friday 24 May 2019

Stagecoach and partners launch legal action over West Coast rail franchise

(Sharecast News) - Stagecoach Group confirmed on Friday that, along with its partners SNCF and Virgin, it has formally launched legal action against the Department for Transport (DfT) in connection with the procurement of the West Coast Partnership franchise.
The FTSE 250 passenger transport operator said a claim has been issued at the High Court in London under Part 7 of the Civil Procedure Rules, together with a judicial review claim.

It said the claim alleged that the DfT breached its statutory duties under the relevant provisions of Regulation 1370/2007, and the relevant principles of EU and English law, in connection with the procurement of the ongoing competition for the franchise.

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

It comes after Stagecoach East Midlands Trains issued a Part 7 claim against the DfT in connection with the procurement of the new East Midlands rail franchise, which was awarded to Abellio, on 8 May.

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

It explained that the claims varied in certain respects, but common to both was the firm's refusal to accept the pension risks that the DfT required operators to bear in relation to the new franchises.

"We believe the rail system should be about appointing the best operator for customers, not about passing unquantifiable, unmanageable and inappropriate risk to train companies," said Stagecoach chief executive Martin Griffiths.

"It is disappointing that we have had to resort to court action to find out the truth around the DfT's decision-making process in each of these competitions.

"However, 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."

Guillaume Pepy, SNCF executive board chairman, added that the French state-owned rail operator was "disappointed" at how the DfT had handled the procurement process for the West Coast Partnership franchise.

"We strongly believe rail franchises should be let on a sustainable basis to those operators who offer the best services, the best trains, and the best customer experience in a cost-efficient manner."

Patrick McCall, senior partner at Virgin Group, described being "extremely" frustrated that the reason the bid was disqualified had "nothing to do" with looking after passengers or running a good train service.

"Virgin Trains consistently tops independent customer satisfaction tables for long-distance franchises thanks to our continued focus on innovation and customer experience, and our fantastic people.

"Dubbed 'mission impossible' when we first started, we've created a successful business which has paid almost a billion pounds to taxpayers in the last five years alone."

McCall said the company had continued to lead the industry with initiatives like automatic delay repay, and scrapping the Friday evening peak fares.

"The DfT has ignored this track record and instead focused on which bidder is reckless enough to take on various unquantifiable risks, such as pensions."

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