The West Coast rail franchise has been awarded by the UK government to First Group and Trenitalia UK, unit of Italy’s main rail operator that will replace Virgin Trains on one of the country’s main north-south routes. The news comes at a point in which the government is in the middle of a legal wrangle over a number of franchise competitions.

The First Trenitalia partnership, owned in proportion of 70 per cent by First Group, will operate the mainline route from December 8, with an initial seven-year phase in which it will run the existing Intercity West Coast services while being what it calls a “shadow operator” to the government’s planned High Speed 2 rail project between London and the north.

According to Grant Shapps, the UK’s transport secretary, the partnership is being supported by Keith Williams, who has been commissioned to look at changes to the rail franchising system. Mr Shapps told BBC Radio 4’s Today programme that the franchise will incentivise operators to run trains on time. Matthew Gregory, FirstGroup’s chief executive, welcomed the decision.

He also said that the differences between this contract and more traditional rail franchises “has resulted in a more appropriate balance of risks and rewards for us as operators”. “We have more than 20 years of expertise in the high speed sector in Italy, which has significantly improved,” said FS Italiane Chief Executive Gianfranco Battisti.

The announcement comes after the Department for Transport scrapped the competition to run rail services between London and parts of south-east England.

Included in the government’s legal wrangle is UK transport company Stagecoach, which in April was disqualified from three rail franchise contests, launched a second legal action against the government in May. Alongside French national operator SNCF and Virgin Trains, its partners in the West Coast mainline bid, Stagecoach alleges the Department for Transport breached its statutory duties when it kicked the consortium out of the tendering process.