The National Infrastructure Commission chair Lord Adonis has quit his post and called on transport secretary Chris Grayling to resign in a stinging attack on the Government.
In a highly critical and public resignation letter, Lord Adonis primarily criticised the Government's Brexit policy but added he would have been ‘obliged to resign anyway because of the transport secretary's indefensible decision to bail-out the Stagecoach/Virgin East Coast rail franchise’.
Lord Adonis attacked the decision to end the East Coast rail franchise three years early and ‘bailout’ private rail companies to the tune of ‘hundreds of millions’ of pounds.
He said Mr Grayling should have followed his own in example from 2009 ‘when National Express defaulted on its obligations to the state for the same East Coast franchise because it too had overbid for the contract’.
At the time, Lord Adonis established a public operator to take over East Coast services and banned National Express from bidding for new contracts.
‘The same should have been done in this case. Yet, astonishingly, Stagecoach has not only been bailed out: it remains on the shortlist for the next three rail franchises,’ Lord Adonis said.
The Department for Transport has said that Virgin Trains East Coast (VTEC) has not received a bailout and will meet its commitment ‘in full’.
However Labour has previously sought clarification over the extent of VTEC’s ongoing commitment over premium payments due from 2020 to 2023 - when the contract was due to end.
Shadow transport secretary, Andy McDonald, suggested the commitment amounted to £232m, compared to £2.019bn in premium payments that would have been due.
Lord Adonis wrote: ‘The bailout will cost taxpayers hundreds of millions of pounds, possibly billions if other loss-making rail companies demand equal treatment. It benefits only the billionaire owners of these companies and their shareholders, while pushing rail fares still higher and threatening national infrastructure investment. It is even more inexcusable given the Brexit squeeze on public spending.’
The move was a ‘cynical political manoeuvre by Chris Grayling’ Lord Adonis suggested.
In 2016, Conservative MP for Bromley and Chislehurst and former communities minister Bob Neill also called on Mr Grayling to resign after he refused to allow Transport for London (TfL) to take over suburban rail services in south east London.
Mr Grayling blocked the London rail devolution deal brokered by former Conservative transport secretary Patrick McLoughlin and former Tory London mayor Boris Johnson to allow devolution to Transport for London when franchises come up for renewal.
A leaked letter showed Mr Grayling opposed devolution of suburban rail routes in case it put them ‘in the clutches of a Labour mayor’.