Stagecoach has brought the government to court, claiming that the Department for Transport (DfT) acted unlawfully in barring its rail franchise bids due to pension concerns.

The firm is seeking compensation and a judicial review, which could result in the franchises that have been already awarded being declared invalid.

It alleges that the DfT breached its statutory duties in connection with the procurement of the ongoing competition for the franchise.

In May 2019, the DfT denied further bidding from Stagecoach and its partners due to concerns that it had failed to safeguard the risk of sections of the Railways Pension Scheme.

However, it was announced at the hearing that a similar case involving Arriva had been resolved out of court.

Jason Coppel QC, representing Stagecoach and its partners, said that the bidding process was “shrouded in secrecy” and that there had been "a long series of mistakes and missteps which result in the unlawful disqualification decisions that we challenge".

Rail firms have urged the government help bridge the estimated £7.5bn pension shortfall they are facing.

The hearing is expected to last approximately four weeks, with a decision announced later in 2020.

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