Government block on Stagecoach rail bid was lawful, rules High Court

The Government's decision to block Stagecoach from bidding for three separate rail franchises due to a row over pensions was lawful, the High Court has ruled.

The rail operator sued the Department for Transport for disqualifying itfrom bidding for the East Midlands, West Coast and South Eastern franchises for refusing to accept the risk of pensions liabilities proposed by the Government.

Arriva also brought legal action against the Government for disqualifying it from bidding for the East Midlands franchise, but reached a confidentialsettlement just before the start of a trial in January.

Stagecoach - which bid for the West Coast franchise in partnership with Virgin and French national railway SNCF - claimed the Government acted unlawfully in the way it conducted the franchise competition process.

But in a judgment delivered remotely on Wednesday, Mr Justice Stuart-Smith dismissed the claims, ruling that all bidders for the franchises "should and would have realised that material non-compliance on pensions gave rise to a serious risk of principled disqualification".

He said there was "no indication and no reason to believe" that the termsproposed by the Government "were anything other than final or that they invited counter-proposals".

The judge added:

In a statement after the ruling, a Stagecoach spokeswoman said:

A DfT spokeswoman said: