By Jonathan Davies

A consortium between Stagecoach and Virgin has been awarded the East Coast mainline rail franchise in a £3.3bn contract.

The partnership will see the return of Inter City Railways which will bring £140m worth of investment over the eight years of the contract.

Virgin and Stagecoach expect to add 23 new services from London and more than 3,000 seats for morning peak time trains.

The route, which runs between London and Edinburgh, has been run by government since 2009 after its previous operator, National Express, ran into financial problems. The line consistently made a profit under public control, but the government insists that re-privatising the route is the best option.

Transport Secretary Patrick McLoughlin said: "This is a fantastic deal for passengers and for staff on this vital route. It gives passengers more seats, more services and new trains.

"We are putting passengers at the heart of the service. I believe Stagecoach and Virgin will not only deliver for customers but also for the British taxpayer."

Martin Griffiths, chief executive of Stagecoach Group, said: "Passengers using the East Coast mainline will benefit from hundreds of millions of pounds of infrastructure investment and service improvements over the next decade."

The decision was not welcomed by the Rail, Maritime & Transport (RMT) union described the move as a "national disgrace".

Mick Cash, RMT general secretary, said: "The government has confirmed that it is bulldozing ahead with the re-privatisation of the East Coast Main Line 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."

Labour support the RMT's view. It wanted to change the law to allow Directly Operated Railways, the government owned company which operating the franchise, to bid for other routes.

Shadow transport secretary Michael Dugher said: "The taxpayer and the travelling public have been sold down the river. This whole franchise process shouldn't have happened.

"East Coast has ... established itself as one of the best train operating companies in the country. Rather than rigging the franchise timetable in order to sell it off before the [general] election, David Cameron's government should have been putting the public interest first and working to get a better deal for passengers."

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