Department for Transport set to sign £5.5bn west coast rail contract, as Virgin Trains considers last-ditch legal action
Sir Richard Branson’s hopes of clinging on to the west coast rail franchise are fading as the government prepares to formally strip Virgin Trains of the London-Glasgow route.
The Department for Transport has rejected Branson’s offer to run the franchise for free if it delays its decision to award the 14-year contract to FirstGroup. It is expected to sign the new £5.5bn deal as soon as Wednesday morning, although Virgin was still considering last-ditch legal action.
FirstGroup’s chief executive, Tim O’Toole, warned that any delay in awarding the contract would wreak havoc as the industry prepares to bid for a slew of high-profile routes, including the Great Western and east coast franchises.
“This is a huge piece of work that is in front of the industry and we have to get on with it,” O’Toole said. Delaying the west coast decision would “invite this kind of behaviour in other deals”.
He defended FirstGroup’s record as the operator of multiple franchises, including Scotrail and First Capital Connect. Responding to repeated warnings from Branson that FirstGroup had overbid, O’Toole said: “This company is going up against an organisation whose core competency is publicity and PR. And they would be a formidable opponent if that was the only criteria.”
Branson took to the radio and TV studios on Monday to urge David Cameron to intervene in the row and “get some sense” into the DfT. He said on BBC Radio 4’s Today programme: “The person that can really intervene to try to get some sense into the Department for Transport is the prime minister, and the prime minister is currently on holiday, the chancellor is on holiday and we would like things delayed by a month or so.
“If, as a result of that, it means that the handover is delayed, we would obviously be very happy to run it on a not-for-profit basis.” The DfT said it had no reason not to sign the agreement.
The Labour party called for the east coast mainline, which runs trains from London to Edinburgh, to remain in public hands. The shadow transport secretary, Maria Eagle, said Britain’s mainly privatised rail network would benefit from a “public sector comparator”.
Eagle told Progress magazine: “I think having a public sector comparator is actually tremendously important. I don’t really think that east coast as it currently runs has had enough of a chance to be that.”
The east coast mainline was returned to public control in 2009 by Lord Adonis, then transport secretary, after he stripped National Express East Coast of the franchise. The company defaulted on its contract after two years on the grounds that it could not afford the franchise payments.
In June, the government decided to launch a consultation to reopen the franchise, with the aim of returning it to the private sector by next year. Eagle said: “There is a very strong argument for not doing that and just letting east coast see what it can do and supporting it in doing that.”