Stagecoach takes legal action over franchise bid ban

Transport operator Stagecoach has launched legal action against the government after it was barred from bidding for a series of rail franchises.

The train and bus operator is preparing a claim for a judicial review, saying the Department for Transport "breached its statutory duties" when blocking its bid to run the East Midlands network.

Stagecoach has also been barred from bidding for the West Coast mainline - which it currently operates under the Virgin Trains banner in a joint venture with Sir Richard Branson's Virgin Group - and a new South Eastern franchise.

The company said it was considering legal action against Transport Secretary Chris Grayling's department on those decisions too.

Stagecoach's bids for the franchises were blocked last month after it said it would not accept potential pension risks in relation to the three franchises which the company estimates at "well in excess of £1bn".

Chief executive Martin Griffiths said: "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.

"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."

The government announced in April that Stagecoach's bids were being blocked, and said it was set to award the East Midlands franchise to Dutch state-owned firm Abellio.

Mr Griffiths said: "In view of the legal action we have taken today we believe 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."

The DfT said: "Stagecoach is an experienced bidder who knowingly submitted non-compliant bids on all competitions. In doing so, they disqualified themselves.

"We do not comment on legal proceedings.

"However, we have total confidence in our franchise competition process and will robustly defend decisions that were taken fairly following a thorough and impartial evaluation process."