THE Government has promised a “transformation” of the East Coast rail franchise after handing an eight year contract to run the link to a venture involving Stagecoach and Virgin.

The move took many by surprise amid strong speculation that Eurostar and Keolis, both French owned, would take over the route from the publicly-run Directly Operated Railways (DOR).

But there is anger from campaigners who pointed to the “stunning success” of DOR – which succeeded National Express in 2009 – and has returned £1bn to taxpayers.

They said the Government had been “hell bent” on returning the service to the private sector with a General Election just months away and had demonstrated “sheer political spite”.

The new franchise will start in March 2015 and run until 31 March 2023, with the option for a one-year extension at the Department for Transport’s discretion.

The winning bid promises

:: A £140m investment package to improve trains, stations and car parks along the route

:: The first ever direct links to Middlesbrough and Thornaby from London and the launch of a new direct London to Sunderland service

:: 65 state of the art Intercity Express Trains being assembled by Hitachi at Newton Aycliffe which will be brought into passenger service from 2018

:: 3,100 extra seats for the morning peak time by 2020

:: A ten per cent cut in standard anytime fares on long-distance journeys to and from London

:: A new academy for rail professionals in York

Despite Sir Richard Branson’s Virgin – which has previously failed in a number of bids for East Coast – only taking a ten per cent stake in the venture, trains will operate under the ‘Virgin Trains East Coast’ brand.

Rail Minister Claire Perry promised a “transformation” for passengers across the region and said the deal would return more money for taxpayers every year than the current operation – £3bn over the next eight years.

She also promised “lots of scrutiny” around the winning bid after DOR’s predecessor National Express hit the financial buffers in its attempts to run the line.

Speaking in York, Mrs Perry, who praised The Northern Echo’s Right Lines campaign, which is calling for greater investment in rail in the North, said: “There has been a good, detailed analysis of these bids and they are very robust. It is a great deal for passengers.

“This is the way to unleash all the benefits for passengers at a time when the railway industry has doubled in passenger numbers.

“We have a model in this country of private sector franchise operators that works and the last Government was happy with that model for 13 years.

“Many parts of the country, particularly the North, have been neglected in terms of transport infrastructure and this is hopefully a real vote of confidence in the regions.”

She said DOR had been a “competent caretaker” which hadn’t been investing in rolling stock, while adding there had been a strong commitment from both Stagecoach and Virgin to retain the bulk of operational staff in York.

Councillor Dave Budd, deputy mayor of Middlesbrough, said news of a long-hoped for direct link to the town was “possibly the most positive transport announcement in a generation”.

But the town’s Labour MP Andy McDonald said: “The letter from the Department for Transport tells us that the reinstatement of the direct service from Middlesbrough to London is scheduled for May 2020. It is completely outrageous to put this vital service for Teesside at the fag-end of the new contract.”

Meanwhile, Durham City MP Roberta Blackman-Woods said: “I am really sorry that this contract has been awarded once again to private sector contractors.

“This decision goes very much against the wishes of local people and their elected representatives who were happy with the service East Coast was giving as well as making a substantial return to the Treasury.”

Mick Cash, General Secretary of the RMT rail union, said: "It is a national disgrace and an act of utter betrayal that the Government has confirmed that it is bulldozing ahead with the re-privatisation of the East Coast Mainline despite all the figures showing that the current public sector operator is handing over a billion pounds back to the British people while delivering huge improvements in service and customer satisfaction.”

Martin Griffiths, chief executive of Stagecoach Group, said: Together with Virgin, our innovative plans will give customers new services, faster and more frequent trains, and easier, more personalised journeys.”

Sir Richard Branson added: "Our long and fruitful partnership with Stagecoach has revolutionised the West Coast line and train travel in the UK and we are looking forward to bringing the lessons we have learnt across to the East Coast and building on the success there.”