The partnership of Stagecoach and Virgin did agree to pay £3.3bn to the Government over the eight year franchise, which was originally due to run until 2023.
However that bid was based on a number of key assumptions and a promise of a huge upgrade of the infrastructure by Network Rail that would have improved the reliability of the track and allowed us to run more trains and carry many more passengers than we do today.
The considerable delays to this upgrade, to new trains, as well as poor track reliability will cost us significant lost revenue (amounting to hundreds of millions of pounds) and torpedoed the assumptions of our original bid. As the facts became clear about these issues – (as well as a drop in Britain’s GDP growth) - a discussion with Government had to take place and a pragmatic solution was needed to keep delivering improvements and investment in the line.
There have always been challenges with running the railway, whether privately or publicly. When the operation of East Coast line was under public ownership before us there was little investment and the services were not modernised.
Contrast that with the £140m we are investing, which has already seen a completely refurbished train fleet, more services, new car parking and cycle facilities and free films and TV on board
The critics argue that Stagecoach and Virgin are somehow benefitting from this. The fact is we have both lost significant amounts of money – well over £100m in total – and have not received a penny in dividends.
We could swallow those losses and simply walk away from the franchise as others have done before. That would be easier. But it would also be wrong. It would bring an abrupt halt to the investment and improvements which are flowing into East Coast. It would mean more disruption to passengers, communities and our people. Yes, improvements never happen as quickly as any of us would like.
But we have a track record of achieving great success in difficult circumstances. It took years to turn the West Coast Main Line around, but we persevered and with new trains, new track and our incredible team, today millions more people want to travel on our trains than ever before and we consistently top customer satisfaction tables.
We have almost trebled passenger numbers to 37 million a year and a similar transformation is underway on East Coast. We should not endanger this now.
The current system can certainly be improved, and we want to continue to work with the Government and Network Rail to bring about improvements for the benefits of our passengers. I hope and believe the East Coast Partnership is a step in that direction.