2What went wrong with the franchise?
6.The East Coast franchise failed because the revenue projections underpinning the VTEC bid were over-optimistic. The reasons as to why it overbid to the extent that it did, however, are not straightforward. The bulk of this chapter considers how and why Stagecoach overbid to the extent that it did, how the bid process was run by the DfT and whether there were any other factors at play, particularly with respect to Network Rail, that contributed to the premature termination of this franchise.
VTEC’s management of the franchise
7.The day-to-day operations of the franchise were managed successfully by VTEC. This point was reiterated by almost all our witnesses14 and, based on passenger satisfaction, it was amongst the highest performing long-distance franchises on the network, at 92%, compared to 86% for the rest of the long-distance sector.15 In terms of punctuality, VTEC, just prior to its termination, was toward the lower end of the performance range when compared with other franchised operators, with an average public performance measure (PPM)16 of 81.5% over the preceding year. The national average PPM was 87.8%. While it is still an important issue for passengers, punctuality is arguably not as an acute issue on this part of the network,17 particularly when compared with other commuter parts, where passengers are much more time sensitive. The fact that passenger satisfaction remained high indicated that VTEC handled any delays reasonably well.18
8.In terms of VTEC’s operational finances, the franchise made an operational profit of around £260 million in the financial year prior to its termination.19 £800m in premium payments were paid to the taxpayer over the life of the franchise prior to its termination and VTEC, on average, contributed 20% more per rail period20 to the tax payer compared to when the franchise services were operated by DOR between 2009 and 2015.21 Stagecoach told us that, of a total of £140 million committed to at the bid stage, it had invested around £75m in the franchise in three years.22 The DfT acknowledged that as an operating business, the franchise was in good shape and commercial revenues more than covered the direct costs of the train business.23
The bid process and contractual arrangements
Revenue projections led to default
9.Despite the reasonable performance of VTEC in running this franchise, Stagecoach and Virgin, as part of their bid, forecast considerably higher revenue growth for this franchise than was eventually realised, with revenues growing at around 3% per annum, compared with unprecedented24 forecasts of around 10% per annum at the time of its bid.25 Thus, the operating surplus generated by VTEC did not fully cover the premium obligations it had with the DfT as part of its franchise contract (see table below). To cover these premium obligations, VTEC had to forego the £165 million parent company guarantee it committed to the DfT when the franchise was let. This is a substantial sum for the main parent company (Stagecoach Group PLC), which has a market capitalisation of around £800m.26 Stagecoach were thus running at a net contractual loss and, given that contracted premium payments were expected to rise significantly, the franchise was no longer viable under the contract originally agreed with the DfT. The contract was subsequently terminated by the Secretary of State and as he put it, “it failed because it ran out of money”.27
Table 1: VTEC contracted franchise payments
|
Year |
2016/17 |
2017/18 |
2018/19 |
2019/20 |
2020/21 |
2021/22 |
2022/23 |
|
premiums £m |
276.1 |
339.8 |
351.7 |
319.5 |
416.7 |
507.9 |
584.5 |
10.It was not immediately clear to us how VTEC got their revenue projections so wrong. In their submission, VTEC said that their bid was based on the “latest economic indices forecasts, provided to all bidders by the DfT and produced by the Office for Budget Responsibility.” They also stated that their bid was classed as being of “low financial risk” by the DfT during their formal risk evaluation process.28 The DfT corroborated this, saying that “VTEC submitted a bid that was assessed as reasonable in the economic climate of 2014, based on their best judgement of projected revenues and passenger growth.”29
11.Passenger and revenue growth on this franchise is affected by what is happening in the wider economy.30 VTEC identified several macroeconomic and external factors which contributed to the revenue shortfalls of the franchise, including:
a)the decline in fuel prices, which according to Neil Micklethwaite, Commercial and Business Development Director of Stagecoach Group, went from around £1.40 at the pump to around £1. He believed that, combined with a rise in rail fares, this meant the car was a “more attractive” travel option.31
b)a significant slowdown in GDP growth;
c)average weekly earnings grew at a slower rate than Stagecoach and Virgin expected;32 and
d)Brexit and terrorism risks damaged consumer confidence and people’s appetite for travel.33
12.Martin Griffiths, Chief Executive of Stagecoach Group, also said that “structural changes in the market” affected revenue growth “in terms of people’s propensity to travel both for employment and for social purposes.”34 The DfT, which is completing a programme of work to understand the slower than expected growth in passenger demand,35 reiterated many of these points in its submission and in oral evidence.36 Polly Payne, Director General of Rail Group at the DfT, recognised that “something structural is happening so that passenger numbers have not been increasing as fast as they had been in the previous decade”, particularly with respect to changing work patterns and passenger habits.37 One key point that emerged in oral evidence with the Secretary of State was that much of the early growth envisaged for the franchise had been predicated on the marketing initiatives under the Virgin brand.38 These expectations, according to the Secretary of State, “were not met and that, more than anything else, is what caused the difficulties in the franchise.”39
13.While passenger demand did not transpire as VTEC might have anticipated, the evidence suggests that the variation in these macroeconomic and external factors did not fall significantly outside normal ranges that might otherwise be expected in the economic cycle. To illustrate:
a)Stagecoach and the DfT, in their oral evidence,40 seemed to pin much of the cause for the slower than expected passenger and revenue growth on an unexpected decline in petrol prices. As revealed in the figure below, petrol prices did indeed drop below levels realised prior to VTEC’s bid submission; but they were not significantly below the longer-term average fuel price and were only below the long-term average for a period of around 18-months or so. Fuel prices have since recovered and remain on an upward trajectory.
Figure 2: Average weekly petrol prices, pump price pence/litre, United Kingdom
Source: ONS
b)Similarly, economic growth has not been as muted as we might have been led to believe by Stagecoach’s evidence. In fact, in the first year of the franchise, GDP growth was consistent with OBR forecasts that were made the prior year when VTEC’s bid was submitted. GDP growth was more subdued in the subsequent two years of the franchise but was still positive and not remotely near recessionary levels.
Figure 3: UK annual GDP growth, 2007–2017, vs. OBR forecasts
Source: ONS; OBR
c)Consumer confidence remains elevated when compared to the longer-term averages. While consumer confidence did trend down in the immediate period after VTEC took over operation of the franchise, it did not nosedive in a way that may not have been foreseeable at the bid-stage.
Figure 4: OECD Index of UK consumer confidence, 100 = long term average
Source: OECD
d)The growth in average weekly earnings in the UK were elevated in the period after VTEC took over operations when compared to the two-years prior.
Figure 5: Average Weekly Earnings - total pay, Great Britain (seasonally adjusted), annual change in three-monthly average
Source: ONS
14.The economic situation since the franchise was re-let has been more subdued than Stagecoach and Virgin might have desired or anticipated, but it was hardly a dire economic environment. This was acknowledged by the Secretary of State who said that “in this particular case, the collapse of VTEC cannot really be ascribed to a major economic shock or something similar, because there was not one at that period.”41 Revenues were behind expectations for the franchise at a very early stage of its operation42 and it eventually failed after just three years of operation. Franchises should be able to withstand normal fluctuations in the economic cycle. The fact that this franchise did not suggests that there was very little resilience built into the bid by Stagecoach and Virgin and it bid for the franchise on very optimistic grounds. This was naïve, and it should have been more aware of the financial risks involved, particularly given the history of this franchise and Stagecoach and Virgin’s long history of bidding for and running franchises in this country. We conclude that Stagecoach and Virgin bear prime responsibility for the failure of this franchise.
The DfT encouraged overbidding
15.While Stagecoach and Virgin were remiss in formulating their bid, because of the potential reputational and financial consequences, owning groups have no incentive to deliberately overbid. This was affirmed by Stagecoach in their written and oral evidence.43 We asked whether the DfT deliberately encouraged overbidding.44 It was clear from the evidence that the DfT did encourage ambitious bids for the ICEC franchise,45 but the DfT said that they “did not actively encourage overbidding.”46 The DfT set out to secure the best deal for the taxpayer but the evidence suggests that the DfT encouraged overbidding by setting unrealistic benchmarks in the Invitation to Tender (ITT) and failing to include the boundaries in the bid process necessary to temper over-optimistic bidding. Specifically:
a)The rail timetable that was included in the ITT, and upon which the revenue projections were based, was unrealistic and was never confirmed as being deliverable by Network Rail to the timescale assumed;
b)There was no single set of realistic macroeconomic parameters upon which the bids could be based, and it was up to bidders to form their own view on wider macroeconomic eventualities;47
c)The stress-testing of the bids was not robust, and the rules of the tender meant that bids were not tempered by the prospect of bid evaluation against downside scenarios (discussed in section below); and
d)Bidders could propose an additional parental guarantee to support their ambitious revenue assumptions.48
16.In any realistic scenario, the bid the Department accepted could not be delivered. We conclude that, while it is up to bidders to do their due diligence, and clearly Stagecoach and Virgin did not, the DfT encouraged over-bidding by setting unrealistic benchmarks in the Invitation to Tender (ITT) and failing to include the boundaries in the bid process necessary to temper over-optimistic bidding. It is surprising the bid process was constructed in this way given the history of failure on this franchise resulting from over-ambitious revenue projections.49
17.It is encouraging that the franchising system has now been adjusted to deter further optimism when bidding and is clearly recognition by the Secretary of State of the failings with this franchise bid process.50 For example, in almost every franchise competition the additional parental company guarantee has been capped, which puts a cap on how ambitious bidders can be about revenue.51 The franchising system has also been adjusted by the DfT in terms of its future approach to stress-testing, macroeconomic risk and infrastructure assumptions in ITTs (discussed in sections below).
Stress-testing of bids by the DfT was insufficient
18.In the wake of the National Express failure in 2009, the National Audit Office (NAO) recommended the DfT conduct “robust stress testing of bids and franchises, against stressed economic scenarios like the recession experienced in 2008–09.”52 This was to identify potential weaknesses in the assumptions of franchise bids, so as to avoid similar franchise failures. It became clear during oral evidence that, while some downside testing was conducted by the DfT, the robustness of the bid was only evaluated against a single, central case scenario presented by Stagecoach and Virgin53 and not in the way recommended by the NAO. Even against this more lenient evaluation, the DfT discovered that “revenue would be lower than [Stagecoach and Virgin] forecast”54 and that there was not sufficient confidence in the financial robustness of the bid when downside scenarios were considered.55 Given this, and knowing that there was a risk of franchise failure from lower than expected revenue growth,56 it is not clear how the DfT still evaluated the Stagecoach and Virgin bid as “low financial risk”57 and why they told the bidding group that the bid was “the best they had ever seen”.58 The Secretary of State conceded in oral evidence that “I certainly would never have assumed that it was a low-risk bid. In fact, I would have been very wary about accepting a high-risk bid on the line.”59
19.As we know, the optimistic scenario that was initially envisaged by Stagecoach and Virgin did not come to fruition and revenues fell short of expectations. The fact that this franchise collapsed within such a short period and against a backdrop of a merely subdued economic environment, suggests that there was very little resilience built into the franchise bid. This is something that should have and could have been identified had appropriate financial robustness tests been completed. We therefore conclude that the financial stress-testing of the bids by the Department for Transport was not robust enough and was inconsistent with the approach recommended by the NAO following the previous franchise failure in 2009. It is encouraging to see that the Department have now revised their approach to bid evaluation for more recent franchise competitions,60 which according to Simon Smith, Director for Policy, Operations and Change in Passenger Services at the DfT, will reduce the risk of default for future franchises.61
There need to be more appropriate risk sharing mechanisms
20.One of the recommendations from the Brown Review62 was that “franchisees should be responsible for the risks they can manage and should not be expected to take external macroeconomic, or exogenous, revenue risk.”63 He added that:
… there should be a clear mechanism to adjust franchise premium/support payments for variations in Gross Domestic Product and Central London Employment growth rates. Not taking exogenous revenue risk will enable franchisees to bid lower profit margins, so giving better value to Government.64
21.The reasoning behind this recommendation, as Martin Griffiths of Stagecoach explained during oral evidence, was that franchisees “had a fixed-cost base and therefore are very revenue dependent, so it is very difficult to take responsibility for all the macro factors that impact the revenue base.”65 He explained further:
The point I was making is that this is a highly regulated, output-based contract. Let me make it simple for you. In theory, if I carried one passenger or 100,000 passengers, my costs are the same … If you are in the real world—if you want to call it that—and you are a house builder and demand drops away, what do you do? You cut the supply. On these types of contracts, you cannot; the supply is fixed, so the revenue is extremely important. That is why, on some of these contracts, the Government have shared in the macro risk.66
22.This recommendation was not incorporated by the DfT in the way that the review prescribed by Brown.67 We heard conflicting views about what the exact macroeconomic risk sharing arrangements were for this franchise. According to Mr Griffiths, “there was no risk-sharing of downside, macroeconomic or any other, so the operator took the financial risk”;68 though that risk was capped at an agreed amount when the contract was signed. Polly Payne of the DfT said that for the ICEC franchise there was a GDP mechanism in place, which “is a risk-share mechanism, such that when GDP changed, and that impacted revenues out of certain bounds, the DfT took some of the risk and the franchise took some of the risk.”69 But there was no such mechanism covering oil prices,70 which was, according to both Stagecoach and the DfT, one of the main determinants behind the revenue shortfalls. Had a more comprehensive macroeconomic risk-sharing mechanism been implemented, as per the Brown Review recommendation, there might have been a chance that this franchise would have avoided premature termination.
23.Both Nicola Wood and Iryna Terlecky, rail consultants, raised doubts as to whether the right approach has been taken by the DfT with respect to the distribution of macroeconomic risk in franchising. The rationale behind their position was that rail franchising is privatisation within “very tight parameters” and is more akin to a public/private partnership.71 They believe that the risk will always come back to Government because it had “the deepest pockets”.72 Ms Wood suggested that given the risk would always end up with Government, it may be better off accepting it from the start.73As Ms Telecky said, the decision around risk-sharing in franchising ultimately comes down to how much Government values market stability.74
24.In oral evidence, the Secretary of State said that the West Coast Partnership, Southeastern and Midland Main Line franchises all have new mechanisms in place for risk sharing. He added that “I would not personally go back to the exact system that was there before.”75 On this point, Simon Smith of the DfT clarified that a forecast revenue mechanism (FRM) had since been implemented when letting new franchises, which:
...in effect, shares revenue variation risk outside a nil band either side of the bid revenue, usually 4%, and if revenue varies by more than 4% from the original bid forecast, 80% of that risk is covered by the Department. At the same time, if revenue support becomes payable under that mechanism, contractual incentive mechanisms start to apply, so the franchisee still has a strong incentive to deliver a good service for passengers, a high-performing service, and to grow revenue.76
25.We recommend that the Department clarify, in detail, exactly what its current and future approach to macroeconomic risk-sharing is, in doing so, it should make clear how it has implemented the relevant Brown Review recommendations.
The Department had no other option than to let the franchise default
26.It is important to note that the financial picture was bleak from day one when VTEC began operations.77 In the subsequent nine-month period between the franchise being bid for and then taken over by VTEC, the underlying financial assumptions behind their bid deteriorated considerably.78 In short, they were playing catch up.
27.Knowing that the financial picture was bleak from the beginning of this franchise, it might have been a simpler for the DfT to find an early contractual solution to this problem. One option might have been to rebase the revenue forecasts at the beginning of the franchise, that is, to adjust bid assumptions for the macroeconomic changes that occurred in the intervening period between bid award and takeover. This option was raised with the DfT by Stagecoach, but at the time the franchise was let, the DfT had a policy of not renegotiating franchises once they had been let.79 This was to preserve both the financial interests of the taxpayer and the integrity of the wider franchising market. There were also no material changes in the wider economic environment (e.g. a recession) to warrant rebasing.80 Renegotiation of the contract with VTEC may have set a precedent for other operators in similar financial positions.81 As the Secretary of State said, “it undermines the credibility of the system if you simply let somebody get away with a failure of this kind.”82 Lord Adonis explained that this was the key motivation behind his decision in 2009 not to renegotiate with National Express after its failure.83 The NAO also commented in 2009 that “any change to the terms of the contract would encourage other franchisees to seek similar treatment.”84 As such, the contract was not rebased and the DfT instead simply waited for Stagecoach to draw down its parent company support until it eventually defaulted. Because of the potential implications for the wider franchising market, we conclude that the Department had no alternative but to adhere to its policy of not renegotiating franchises and to let the contract run its course to default.
The taxpayer has not bailed out Stagecoach and Virgin
28.Various reports of a bail-out emerged after it appeared and was then confirmed that the VTEC contract would be terminated prematurely. The franchise has not delivered the premiums to the taxpayer that were originally envisaged when the franchise was let. However, based on the contract that was originally agreed with the Government, the taxpayer has not bailed out Stagecoach and Virgin. This is because Stagecoach and Virgin had their liability capped at £165 million, which was the amount they committed to the DfT though their parent company guarantee.85 It is unlikely that Stagecoach, or any prospective bidder for this franchise, would have signed up to deliver those premiums had the liability not been capped. The DfT, without conducting the necessary due diligence on the robustness of the bids, agreed to a contract that had unrealistic revenue expectations. With it, came the risk that it could collapse and that it would only be able to recoup a limited amount of the premiums that were originally agreed.
Network Rail’s role
Delayed infrastructure works on the East Coast Mainline not to blame for default
29.VTEC’s original revenue expectations for the franchise were predicated on an enhanced timetable being delivered from 2019 onward, underpinned by new rolling stock and accompanying infrastructure enhancements. In January 2018, Sir Richard Branson blamed part of the franchise failure on Network Rail and their delays in delivering the required enhancements for the new 2019 timetable. He claimed that the £3.3 billion bid was “based on a number of key assumptions” which have not come to fruition. He further claimed that “poor track reliability” cost VTEC “hundreds of millions of pounds and torpedoed the assumptions of our original bid”.86 This was a cynical attempt to divert attention from Virgin and Stagecoach’s failures. This resulted in confusion around what was promised to be delivered in terms of infrastructure upgrades on the East Coast Mainline and by when, and whether any delays to infrastructure upgrades contributed to the early termination of this franchise. The Chair of the Committee wrote to both Network Rail87 and VTEC88 seeking clarity on these points.
30.Network Rail said there were three essential elements to ECML infrastructure works to enable substantial capacity improvements, with the first two essential for the new Intercity Express Programme (IEP) trains:
a)the East Coast Capability for IEP scheme;
b)the East Coast Power Supply Upgrade scheme; and
c)the East Coast Connectivity Fund.
31.The East Coast Capability for IEP has been completed on the entire ECML to Edinburgh, except for Edinburgh Waverley station, work on which is ongoing. East Coast Power Supply Upgrade had been planned in two parts: first from Wood Green to Bawtry (near Doncaster); then further north to Edinburgh. Network Rail said the first part had been “completed in August 2017 to budget and programme.” Funding for the second part of the works, however, had not been included in the settlement for Control Period 5; consequently, they had not yet been programmed.89 In relation to the East Coast Connectivity Fund, Network Rail claimed that “at the point the East Coast franchise was bid for and awarded” it was “at an early stage of development and funding for delivery had not been committed to individual projects.” Moreover, it had not “specifically defined outputs in terms of quantum of increased capacity.” It claimed this was made clear to all bidders. Network Rail said it “had not been asked to endorse the final assumptions used by the successful bidders.”90 On 23 July 2018, the Prime Minister confirmed that £780 million would be made available to finish the upgrades that were initially planned for the ECML.91
32.VTEC claimed that at the time of bidding, all necessary works to enable the new rolling stock and enhanced timetables from May 2019 had been scheduled for completion during CP5.92 In oral evidence, Neil Micklethwaite, of Stagecoach, said that the ITT and the subsequent contract that was signed with the DfT “had a transformational timetable for May 2019 that was predicated on a number of infrastructure enhancements being delivered by the end of 2019.”93 He also said that the infrastructure enhancements were in the Office of Rail and Road’s final determination for CP5. With respect to the timetable that was specified in the ITT, Simon Smith of the DfT commented:
The franchise specification reflected the best view at the time of the infrastructure that was expected to be delivered on the east coast. Clearly, subsequent to the franchise competition, we had the Hendy review and the changes to the enhancements programme that have resulted in changes of expectation around when some of the projects will be delivered.94
33.VTEC acknowledged that Network Rail “has mostly delivered the infrastructure which was due to be completed by now” but “future infrastructure enhancements and upgrades [are] comprehensively delayed, some without a new implementation date at all.”95 Mr Griffiths did acknowledge in oral evidence that the delays to the infrastructure upgrades were not responsible for the early termination of the franchise.96
34.When asked if Network Rail’s programming of infrastructure work had played any part in the VTEC failure, the Secretary of State said there would “potentially” be infrastructure issues “down the track”, but the current difficulties were “way before we get to that point”.97 The Government said that “from the start of this franchise to date, all infrastructure upgrades planned for the East Coast have been delivered.”98 The failure of the franchise up to this point was, according to the Secretary of State because VTEC had “overbid” for it99 and in oral evidence, said that “I would not blame Network Rail for the failure of the franchise.”100
35.Sir Richard Branson’s comments in January 2018 left the initial impression that the delay to assumed infrastructure enhancements contributed to the early termination of this franchise. We conclude that Network Rail do not bear any responsibility for the early termination of this franchise. To date, Network Rail have provided all the infrastructure upgrades that it had formally committed to when this franchise was let. A series of other upgrades were assumed to occur by the DfT and VTEC to deliver an enhanced timetable from 2019 onward; though there was no formal funding commitment to these upgrades when the franchise was let. The delivery of these enhancements will now occur but later than was initially anticipated by the DfT and VTEC. This delay would have undermined assumed revenue growth from 2019 onward but did not directly contribute to the early termination of this franchise. This would have forced a change in the contract negotiated between the DfT and VTEC;101 Mr Smith of the DfT said that there are already mechanisms embedded in the franchising process to enable contract changes from altered infrastructure enhancements.102
36.The DfT is responsible for specifying the assumed timetable in the ITT, which included an unrealistic timetable for infrastructure upgrades. We therefore conclude that the Department for Transport are responsible for the confusion around what infrastructure enhancements on the East Coast Mainline were going to be delivered, and when, throughout the life of the East Coast franchise. In specifying the ITT, the DfT should have been aware of the risks involved in delivering the franchise timetable it specified in the ITT, particularly given that the funding had not been committed and there were wider infrastructure enhancement issues happening in parallel elsewhere on the network. Network Rail claims to have provided transparent advice to the bidders around exactly what and was not deliverable and in doing so, fulfilled its obligations during the franchising bidding process. Importantly, though, they were not provided with formal sign-off during the bid process, which might have rectified such confusion before a contract was agreed. We conclude that there was a failure from the Department in not providing Network Rail with formal sign-off of the infrastructure assumptions for the East Coast franchise. We recommend that the Department for Transport clarify exactly what role Network Rail now have in the bidding process and recommend that, if it is still not the case, their relevant representatives have formal sign-off of any bids prior to a successful bid being decided. More generally, we would like to see much closer alignment between the invitation to tender in the franchise agreement and Network Rail’s planned enhancements. The DfT has responsibility to ensure all parties to the franchise bid process are aligned and have equal and accurate sight of what infrastructure upgrades are planned.
37.The Government has adopted a new approach to the way enhancements will be specified, funded and completed on the network. As opposed to this occurring as part of the control period process, there will now be a rolling programme of enhancements, otherwise known as the ‘enhancements pipeline’.103 Stagecoach and Network Rail both said that there needed to be a clear methodology for making sure contracts could be flexibly changed in the future in response to the additional uncertainty associated with the enhancements pipeline.104 It is not clear whether the change mechanisms referred to by the DfT are sufficient to manage this additional uncertainty. We recommend that the Department outline how it will specify future infrastructure enhancements in the invitations to tender and what change mechanisms it has in place and whether they can cope with any uncertainty arising from the enhancements pipeline proposals.
Network Rail performance poor but not significantly contributable to default
38.
VTEC initially identified Network Rail’s “sustained poor performance of the network”, which between June 2015 and June 2017 fell below contractual thresholds under the track access agreement, as a reason for the financial difficulties it had on the franchise. They said this “clearly put passengers off travelling”.105 Network Rail acknowledged in their written106 and oral evidence107 that their performance in managing the ECML had not been up to standard. While this clearly undermined franchise performance, it was not on a scale that led to VTEC defaulting on their contract. Additionally, as Mr Griffiths of Stagecoach acknowledged, these infrastructure performance issues were dealt with through “normal industry mechanisms”,108 including the schedule 4, schedule 8 and sustained poor performance mechanisms, which remunerated VTEC. At the point of franchise termination, VTEC had a claim against Network Rail for £72 million for sustained poor performance, the quantum which is now being contested between Network Rail and the new operator, London North Eastern Railway.
15 National Rail Passenger Survey, Transport Focus, Autumn 2017 wave; Transport Focus (ECR0009)
16 The public performance measure (PPM) shows the percentage of trains which arrive at their terminating station within 5 minutes (for London & South East and regional services) or 10 minutes (for long distance services).
19 Public Accounts Committee, Rail franchising in the UK, Thirty-Fifth Report of Session 2017–19, 27 April 2018
20 There are fourteen rail periods per financial year.
21 East Coast Railway Line: Written question - 118670
25 The Sunday Times, Is this any way to run the East Coast railway?, , 7 January 2018
35 The Department told the PAC that it has identified between 50 and 60 factors which impact the growth in passenger demand, including changes in working patterns towards more flexible working and a reduction in the number of people commuting five days a week into London. It told the PAC that the relatively low cost of petrol has also increased competition between rail transport and long-distance coaches and cars.
44 That is, encouraging bids that are overly optimistic in terms of revenue expectations and which are unlikely to be deliverable or sustainable in practice.
52 National Audit Office, The InterCity East Coast Passenger Rail Franchise, HC 824, Session 2010–11, 24 March 2011
62 The Brown Review was commissioned in response to the failed re-let of the West Coast franchise in 2012 and examined the wider rail franchising programme, looking in detail at whether changes were needed to the way risk was assessed and to the bidding and evaluation processes.
63 Department for Transport, The Brown Review of the Rail Franchising Programme, January 2013
64 Department for Transport, The Brown Review of the Rail Franchising Programme, January 2013
84 National Audit Office, The InterCity East Coast Passenger Rail Franchise, HC 824, Session 2010–11, 24 March 2011
86 Virgin, Clarity on Virgin Trains East Coast media reporting, 5 January 2018
87 Correspondence between the Chair of the Transport Select Committee and Rob McIntosh of Network Rail, 15 January 2018
88 Correspondence between the Chair of the Transport Select Committee and David Horne of Virgin Trains East Coast, 15 January 2018
89 Correspondence between the Chair of the Transport Select Committee and Rob McIntosh of Network Rail, 15 January 2018
90 Correspondence between the Chair of the Transport Select Committee and Rob McIntosh of Network Rail, 15 January 2018
91 Prime Minister’s Office, Cash injection for Northern Powerhouse as Cabinet visits North East, 23 July 2018
92 As outlined in the CP5 determination documents.
98 East Coast Rail Franchise: Written question - 125443
103 For full information, see: Department for Transport, Rail Network Enhancements Pipeline: A New Approach for Rail Enhancements, March 2018
Published: 12 September 2018