Stagecoach for East Midlands

22 June 2007

The Department for Transport (DfT) announced today that bus and rail firm Stagecoach has won the contract to operate rail routes in the East Midlands.

The new franchise will run from 11 November until April 2015.

In a bizarre arrangement, the DfT (in fact, the public) will pay Stagecoach a subsidy at the start of the period – despite the fact that Stagecoach expects to make £235 million a year revenue. The plan is that the company will eventually, over the whole period, pay £133 million to the government.

The DfT will allow the company to increase ticket prices by 3.4 percent a year over inflation on unregulated fare routes, and by 1% above inflation on regulated routes.

Meanwhile ASLEF’s general secretary Keith Norman says the complexity of the arrangement emphasises the ‘utter waste’ of the franchising system.

‘The public loses out – unless they are rich investors or smug accountants,’ he says. ‘The whole franchising exercise wastes public money, takes power away from passengers and enables the DfT to avoid its responsibilities.

‘The government’s task is not to deal out a franchise like a casino croupier - and then walk away from the table.’

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