Has Stagecoach paid the price for East Coast mainline? Hardly
Along with Virgin Trains, the firm has got off very lightly. It’s even free to bid on new franchises
“Stagecoach got its numbers wrong, it over-bid and it is now paying the price,” says the transport secretary, Chris Grayling, announcing that the East Coast mainline could once again be taken into public hands.
Grayling’s first two statements are correct. Stagecoach plainly took leave of its senses in agreeing to pay £3.3bn to run the London-to-Edinburgh line for eight years. The company couldn’t even keep the financial wheels turning for three years and has now breached a financial covenant.
PPP is a financial invention promoted as a win-win: the companies get lots of lucrative contracts to build stuff for the state; while the government gets new infrastructure more quickly and without the financial risk – private firms bid for the work and the market ensures taxpayer value.
Source: Guardian Transport