Stagecoach takes legal action against DfT over rail franchises
Stagecoach Group
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16:34 27/06/22
Stagecoach Group confirmed on Wednesday afternoon that its wholly-owned subsidiary, Stagecoach East Midlands Trains, has commenced legal action against the Department for Transport.
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The FTSE 250 passenger transport operator said the claim had been issued at the High Court in London under Part 7 of the Civil Procedure Rules, and alleged that the DfT breached its statutory duties in connection with the procurement of the new East Midlands rail franchise.
Stagecoach East Midlands Trains was disqualified from the procurement of that franchise, and the DfT announced on 10 April that it intended to award the franchise to Abellio after the expiry of a voluntary 10 working day standstill period.
That standstill period had subsequently been extended, but was due to end at midnight on Wednesday.
Stagecoach said it had informed the DfT that it was also preparing a claim for judicial review of its decisions to disqualify the company from bidding for the East Midlands rail franchise and to award the franchise to Abellio.
Additionally, it said it was considering legal action against the DfT in respect of the ongoing competitions for the West Coast Partnership franchise, and a new South Eastern franchise.
The claim that had been issued, and the further legal actions under preparation, varied in certain respects, the board explained, but common to all was the company’s refusal to accept the potential pension risks that the DfT required operators to bear in relation to the three new franchises.
It said the full extent of those risks was unknown, but it estimated them to be well in excess of £1bn.
“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,” said Stagecoach Group chief executive officer Martin Griffiths.
“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.”
Griffiths said that, in view of the legal action Stagecoach ahd taken, it believed 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.