STAGECOACH has stepped up its legal fight to overturn its exclusion from bidding for three major rail franchises, claiming its action is needed to restore public and investor confidence in the system.

The Perth-based company is now taking the Department for Transport (DfT) to court over its disqualification from the West Coast Partnership franchise competition.

It comes shortly after Stagecoach, which currently runs the West Coast contract with Virgin, revealed plans to sue the Dft after being told its bid for the East Midlands franchise had been barred. The government department controversially awarded the deal to run East Midlands to Abellio, the Dutch-owned operator which has come in for heavy criticism for its performance on the ScotRail service. Stagecoach has run East Midlands since 2007.

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The legal action follows the revelation by Stagecoach in April that its bids for the West Coast, East Midlands and South Eastern services had been disqualified by the Dft, leaving its rail ambitions in disarray. The company, alongside partner Virgin, was stripped of the East Coast franchise last year, after revenue targets were not met, leaving the group nursing a £180 million bill.

Stagecoach, founded by Sir Brian Souter and sister Ann Gloag in 1980, was told its bids were barred from the competitions because they did not take sufficient liability for the Railway Pension scheme.

The company hit back, declaring that forcing the private sector to take on the level of risk demanded by the Dft would lead to more franchises failing. It said it had been disqualified because it refused to pay more than £1 billion to cover liabilities on the scheme, which replaced the former British Rail Pension scheme following privatisation.

On its latest legal move, Stagecoach has lodged a claim at the High Court in London, together with a judicial review claim, alleging that the Dft had breached its statutory duties in connection with the West Coast bidding competition. It cites a section of Civil Procedure Rules which it says requires the Government to “adopt a competitive tendering process which is open to all operators, and is fair, transparent and non-discriminatory”.

The claim has been brought by West Coast Trains Partnership Limited, in which Stagecoach has a 50 per cent share. French rail operator SNCF holds a 30% stake, and Virgin 20%.

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Stagecoach is also considering legal action over its exclusion from the South Eastern contest.

Martin Griffiths, chief executive of Stagecoach, said: “We believe the rail system should be about appointing the best operator for customers, not about passing unquantifiable, unmanageable and inappropriate risk to train companies.

“It is disappointing that we have had to resort to court action to find out the truth around the DfT’s decision-making process in each of these competitions.

“However, we hope court scrutiny will shine a light on the franchising process and help restore both public and investor confidence in the country’s rail system.”

Guillaume Pepy, executive board chairman at SNCF, said: “We are disappointed at how the DfT has handled the procurement process for the West Coast Partnership franchise.

“We strongly believe rail franchises should be let on a sustainable basis to those operators who offer the best services, the best trains, and the best customer experience in a cost-efficient manner.”

A Dft spokeswoman: “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.”

Shares in Stagecoach closed down 0.8p, or 0.63%, at 126.7p.