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die belebende Bedenkung

Wrong numbers and wrong response

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Extract from Stagecoach Group plc interim results (6 Dec 2017), indicating that the company wanted to continue running East Coast, but without making 'onerous' payments - in essence, a scot-free bailoutVirgin and Stagecoach “got their numbers wrong” when they bid for the East Coast rail franchise, transport secretary Chris Grayling admitted during a disappointing debate on rail franchising on 10 January.

[CG:] They [VTEC] have been losing money steadily, and have now lost the best part of £200 million in the past three years. Despite that, I am holding them to their full financial obligations, taking every last penny of the £165 million guarantee that we insisted on when they took on the franchise.

There is no “viable legal mechanism” through which any more money can be “extracted from the company”, but Mr Grayling seems disinclined to learn lessons or ban Stagecoach and Virgin from new franchising contracts. In 2011, the Commons public accounts committee stated that, in future, the Department for Transport must make clear to train operating companies that “failure to deliver on their obligations will have serious lasting consequences”.

[CG:] My Department is preparing contingency plans as we do not believe that the franchise will be financially viable through to 2020. I clearly have a duty to do that for passengers. When we reach a conclusion that works, I will come back to this House and make a statement. However, I do plan to go ahead with the east coast partnership, as I indicated in my statement a month ago. People in this country do not understand the separation of track and train, and as part of our reforms we are bringing the two together, as Sir Roy McNulty recommended in his report.

Richard's red herring

'The mathematical truism of compound growth means that one year of underperformance is retained throughout the franchise'

Implications of train operator revenue shortfall early in franchise (CBT Thought Leadership)

Written by beleben

January 11, 2018 at 1:08 pm

Posted in Politics, Railways

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