Legal action over ‘inappropriate’ risks in new West Coast franchise

UK: The West Coast Trains Partnership joint venture of Stagecoach Group (50%), SNCF Holding (30%) and Virgin (20%) confirmed on May 24 that it had begun legal action against the Department for Transport. This follows DfT’s decision to disqualify it from bidding for the West Coast Partnership contract covering the operation of inter-city services on the West Coast Main Line and preparations for the launch of High Speed 2 services.

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. This argues that DfT breached the requirement for a tendering process which is fair, transparent and non-discriminatory.

In April DfT disqualified Stagecoach and its various partners from the West Coast Partnership, East Midlands and South Eastern franchise competitions. DfT deemed the three bids non-compliant, as Stagecoach was unwilling to accept the way pension risks would be allocated to operators under the new franchises.

On May 8 Stagecoach East Midlands Trains issued a Part 7 claim in connection with the East Midlands franchise, which had been awarded to Abellio. Arriva also sought more information about DfT’s assessment of the East Midlands bids, its own bid having also been deemed non-compliant leaving Abellio as the sole remaining bidder.

Stagecoach said its East Midlands and WCP claims vary in certain respects, but common to both is its refusal to accept pension risks which CEO Martin Griffiths described as ‘unquantifiable, unmanageable and inappropriate’.

SNCF President Guillaume Pepy said the French state railway was ‘disappointed at how the DfT has handled the procurement process for the West Coast Partnership franchise’, adding that ‘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, said it was ‘extremely frustrating that the reason our bid was disqualified has nothing to do with looking after passengers or running a good train service’. He felt DfT had ignored its track record as incumbent West Coast operator ‘and instead focused on which bidder is reckless enough to take on various unquantifiable risks, such as pensions’.

Responding to the legal action, a DfT spokesperson said Stagecoach was an experienced bidder which had knowingly submitted non-compliant bids, and in doing so ‘they disqualified themselves’. While it does not comment on legal proceedings, DfT has ‘total confidence in our franchise competition process and will robustly defend decisions that were taken fairly following a thorough and impartial evaluation process.’

Andy McDonald, Shadow Transport Secretary for the opposition Labour party and a supporter of nationalisation, said the legal actions now underway showed that the franchising system ‘is beyond reform’.