STAGECOACH has been banned from bidding for three rail franchises, in a clash with the Department for Transport over pension risks. Abellio has been awarded the East Midlands franchise, and will take over from Stagecoach in August.

The surprise move by the Department for Transport means that Stagecoach is now also off the franchise shortlists for Southeastern and the key West Coast Partnership, which is set to be the launch contract for HS2. Stagecoach shares fell after the announcement, and were down 4.28p, just over 3 per cent, by 08.45. They have since staged a partial recovery.

The DfT has accused Stagecoach of lodging ‘non-compliant’ bids for all three franchises.

A spokesman for the Department 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.’

There had already been reports that franchise-holders were uneasy about their liabilities for pension funds, and it is pensions which have provided the spark now.

Stagecoach Group chief executive Martin Griffiths said: ‘We are extremely concerned at both the DfT’s decision and its timing. The Department has had full knowledge of these bids for a lengthy period and we are seeking an urgent meeting to discuss our significant concerns.

’We have drawn on more than two decades of rail experience and worked in partnership with local stakeholders to develop high quality proposals to improve each of these rail networks.

‘We bid consistent with industry guidance issued by the Rail Delivery Group and shared with the DfT. Without ongoing Government support for the long-term funding of railway pensions, The Pensions Regulator has indicated that an additional £5billion to £6billion would be needed to plug the gap in train company pensions.

‘In contrast, the rail industry proposed solution would have delivered an additional £500million to £600million into the scheme. This would have provided better stability and security for members and much better value for taxpayers.  We are shocked that the Government has rejected this for a higher risk approach.’

(this story is being updated, and more follows)

source= http://www.railnews.co.uk/news/2019/04/10-franchise-ban-for-stagecoach-abellio.html