Rail franchising row sparks 'breach of Ministerial Code' claim

The Transport Secretary has been accused of breaching the Ministerial Code during a statement to MPs about rail franchises.

Chris Grayling told the Commons on Monday that Stagecoach had breached a key financial covenant on its East Coast Main Line service, leading to the prospect of the franchise being directly operated by the Transport Department.

He also announced that Virgin is being given an extension to the West Coast line, and that Stagecoach is among a shortlist of firms for a new contract to run the East Midlands franchise.

He said the Government had no "adequate legal grounds" to restrict Stagecoach from bidding.

Lord Adonis has written to Mr Grayling, pointing out that he was given advice by the Transport Department's lawyers in 2009 that it would be reasonable not to invite a company to bid for future franchises where it had recently failed to deliver on a previous franchise.

His letter said: "You could have ascertained this from the officials who advised me in 2009, so I assume your untrue statement in the Commons was wilful in order to attempt to deflect criticism from your extraordinary decisions to give a new contract to Virgin for the West Coast Main Line, to allow Stagecoach to bid for the next three rail franchises and even to consider allowing Stagecoach to continue operating the East Coast on a new contract.

"You are in breach of the Ministerial Code. I would be grateful for a parliamentary statement today correcting the record."

Mr Grayling said there would be no impact on services or staff on the East Coast, adding that the rail franchising system had delivered "great benefits" to passengers.