THE contract for the East Coast rail franchise has been signed by the Department for Transport as the deal is completed with Inter City Railways.

Inter City Railway, which is a venture between Stagecoach and Virgin, will pay £3.3 billion to run the East Coast Main Line until 2023.

It takes over from Directly Operated Railways (DOR), which owns the York headquartered East Coast company on behalf of the Department for Transport, prior to the Government's plans to re-privatise the line.

The consortium Inter City Railways has committed to invest £140 million in stations and trains, reduce travel times from Leeds to London, and introduce a direct route to the capital from Huddersfield.

There will be an additional 3,100 seats at peak times by 2020, while there will be 12,200 seats added across the fleet.

Martin Griffiths, chief executive of Stagecoach Group, said: "While the franchise officially begins in March next year, our team are already planning ahead to build on the strong pride, heritage and success at East Coast.

"In the coming months, we will be working closely with employees and the management team to ensure a smooth transition to the new franchise.

"Stagecoach and our partners Virgin see investing in people and delivering great customer service as key to the future. We look forward to welcoming staff into the Stagecoach and Virgin family and making Virgin Trains East Coast a huge success."

Transport Secretary Patrick McLoughlin welcomed the signing of the "fantastic deal" claiming that it will "give British taxpayers outstanding value for money".

He said: "With the signing of the contract, Stagecoach and Virgin are firmly on track to deliver these improvements.

"The new services have only been made possible by the government’s investment in the railways, a vital part of our long term economic plan."