Stagecoach barred from franchise bids over pensions feud
Stagecoach has been banned by the Government from competing for three rail franchises because of a row over pensions.
The train and bus operator said it was verbally informed by the Department for Transport that it has been disqualified from three UK rail franchise competitions – East Midlands, South Eastern and the West Coast.
Bidders for the franchises were asked to bear the full long-term funding risk on relevant sections of the Railways Pension Scheme, Stagecoach said.
It added that the Pensions Regulator is seeking additional funding because of “serious doubts” over the Government’s ongoing support for the industry-wide scheme.
Stagecoach chief executive Martin Griffiths said: “We are extremely concerned at both the DfT’s decision and its timing. The Department has had full knowledge of these bids for a lengthy period and we are seeking an urgent meeting to discuss our significant concerns.
“The Pensions Regulator has indicated that an additional £5 billion to £6 billion would be needed to plug the gap in train company pensions.”
The rail industry proposed solution would have delivered an additional £500 million to £600 million into the scheme.
This, Mr Griffiths said, would have provided “better stability and security for members” and better value for taxpayers.
“We are shocked that the Government has rejected this for a higher-risk approach. We would urge that a full independent value-for-money review is undertaken into this issue without delay.”