Posted 17th April 2019 | 4 Comments

DfT response to Stagecoach ‘vague and incomplete’

Updated 07.50 18 April

THE Department for Transport has responded to the demand from Stagecoach Group for a ‘prompt, full and transparent response to help restore public confidence’ after three franchise bids from the Group were rejected on the grounds that they were not compliantwith DfT requirements concerning pension funding.

It had been reported that the deadline was 16.00 on 16 April, but Stagecoach has now clarified that the deadline was actually 24 hours earlier, and that a response has been received.

However, the matter appears to be far from settled.

A spokesman for Stagecoach said: ‘We can confirm we have received a letter from the DfT, which we are reviewing in detail. However, we consider the response to our questions to be both vague and incomplete, leaving many of the fundamental issues and concerns raised by ourselves and other parties unaddressed.’

Stagecoach has been told that its bids for East Midlands, South Eastern and West Coast Partnership have all been rejected, because its alternative proposals for pensions were not acceptable to the government. The company said ‘we refused to accept the transfer of significant potentially unmeasurable pension risk’.

The full texts of the letter from Stagecoach and the DfT’s response have not been published.

It has been confirmed that Arriva was also barred from continuing with its bid for East Midlands, again because it had apparently attempted to amend the pension clauses in the proposed contract for the same reasons as Stagecoach, leaving Abellio as the only contender.

The DfT said: ‘Arriva chose to propose significant changes to the commercial terms for the East Midlands contract, leading to a bid which proposed a significantly different deal to the one on offer. The result is that they are responsible for their own disqualification from the competition in line with the terms of the published ITT.’

Stagecoach has asked that the confirmation of the Abellio award, which would normally follow after a ten-day standstill period, be delayed by a further fourteen days. It is not yet known whether the DfT has agreed to this.

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • david c smith, Bletchley

    One thing this latest debacle seems to illustrate is that we are in need of more effective accountability to all the stakeholders. The current model of trying to do this via central government just doesn't seem to be workable.

    Accountability would, I believe, be much more direct / effective if passenger operations were run on a more " horses for courses" basis, with local , direct - democracy control for natural monopolies, such as commuter and urban services, whilst intercity and long distance services should be given over to ongoing, open - access competition.

    Various rail commentators have mentioned the way the current TOC's are to all intents, state controlled private monopolies now, a situation that ought not to carry on.

  • Jez Milton, Manchester

    Nobody likes a bad loser

  • Chris Jones-Bridger, Buckley Flintshire

    What a way to run a railway. Comes down to the children squabbling over who predicted the cash flow in their favour. If past experience is a guide neither Stagecoach/Virgin nor DfT will want to be found holding a loosing hand. While Virgin/Stagecoach emerged with the upper hand in the 2012 WCML franchising debacle DfT stood it's ground with the most recent ECML franchise failure. Stagecoach paid dearly for the miscalculations in the latter case. Best of three?

    Interesting though that Arriva took the same approach over pensions in it's bid.

    Customers, staff & taxpayers demand some kind of stability. All are important stakeholders in the industry and the inevitable costs of this dispute ending up in the courts will do little for improving the service that is meant to be core purpose of the railway.

  • Neil Palmer, Waterloo

    It's not only the current franchise model that isn't fit for purpose, it's also the dysfunctional DfT. So basically we're down to one (foreign) bidder as the rest were disqualified (and First/Trenitalia withdrew to focus on HS2) for refusing to be dumb enough to take on a pension obligation they would have no control over. I hope Stagecoach do take legal action against the DfT, who have proven time and time again they couldn't organize a ****-up in a brewery. Bring back the SRA and remove the DfT from the process they are obviously unqualified to manage.

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