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Stagecoach launches legal action against Government over East Midlands franchise

The firm alleges that the Department for Transport ‘breached its statutory duties’.

Stagecoach has been banned by the Government from competing for three rail franchises (Peter Byrne/PA)
Stagecoach has been banned by the Government from competing for three rail franchises (Peter Byrne/PA)

Stagecoach has launched legal action against the Department for Transport (DfT) over its disqualification from the East Midlands rail franchise competition, the company has announced.

The firm has been banned from bidding for the East Midlands, South Eastern and West Coast Partnership franchises after submitting non-compliant bids in a row over pensions.

In a claim issued at the High Court, Stagecoach alleges that the DfT “breached its statutory duties”.

We have had no option but to commence legal action Stagecoach chief executive Martin Griffiths

Stagecoach chief executive Martin Griffiths said: “We remain deeply concerned at the Department for Transport’s procurement of the three most recent rail franchise competitions and the rationale behind its decisions.

“Despite our continued requests for full transparency around these matters, many fundamental questions remain unanswered.

“As a result, regrettably we have had no option but to commence legal action against the DfT to ensure the serious issues involved and the DfT’s opaque decision-making are subject to proper public scrutiny.

“In view of the legal action we have taken today we believe it would be untenable for the DfT to proceed to sign any contract for the East Midlands franchise without a full and proper review of the procurement of that franchise to help restore public confidence in the process.”

Stagecoach is also preparing a claim for a judicial review over the East Midlands decision and is considering legal action against the DfT over the South Eastern and West Coast Partnership franchises.

The firm said it refuses to accept the potential pension risks that the department requires operators to bear.

It said: “The full extent of these risks is unknown but we estimate them to be well in excess of £1 billion.”

The DfT announced on April 10 that it intended to award the East Midlands franchise to Abellio after a “standstill period” which is due to expire at midnight on Wednesday.

A spokesman for the department said: “Stagecoach is an experienced bidder who knowingly submitted non-compliant bids on all competitions. In doing so, they disqualified themselves.

“We do not comment on legal proceedings. However, we have total confidence in our franchise competition process and will robustly defend decisions that were taken fairly following a thorough and impartial evaluation process.”

PA

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