Eleventh hour legal challenge by Virgin boss halts West Coast railway deal

| September 4, 2012 | 0 Comments

19:22 EST, 3 September 2012


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02:52 EST, 4 September 2012

The controversial West Coast railway deal was dramatically halted last night following a legal challenge by Virgin boss Sir Richard Branson.

Transport minister Theresa Villiers revealed ministers are still to sign a contract with FirstGroup to run the rail franchise and that the competition ‘remains live’.

In a written statement, she confirmed that the deal had been delayed while the Government ‘robustly defends’ itself against Mr Branson’s legal challenge.

Virgin boss: Sir Richard Branson's

Theresa Villiers MP

Court action: Transport Minister Theresa Villiers, right, said the Government will defend itself against a legal challenge from Sir Richard Branson, left,

The timing of the announcement, on the eve of Mr Cameron’s first reshuffle, is embarrassing for Transport Secretary Justine Greening who is facing speculation that she will be moved.

Just days ago, Miss Greening insisted the Government would ‘push on’ with the 13-year contract with FirstGroup as it represented a ‘good deal’ for taxpayers.

The contract was due to be signed last week.

But Miss Villiers said: ‘I believe that the commitments in First West Coast’s bid represent significant improvements for passengers and will provide a good return for the taxpayer.’

But she added: ‘As a result of a legal challenge, which the government intends to defend robustly, we have not yet signed the contract with First West Coast, and consequently the competition remains live.’

Court clash: A Virgin train passes a First Group train on the West Coast line near Abington, Scotland, as legal action by Virgin Rail has prevented the Government signing a contract awarding a major franchise to a rival bidder, MPs were told

Court clash: A Virgin train passes a First Group train on the West Coast line near Abington, Scotland, as legal action by Virgin Rail has prevented the Government signing a contract awarding a major franchise to a rival bidder, MPs were told

Sir Richard launched a court bid to prevent the Government stripping him of his lucrative rail franchise just hours before the contract was due to be signed.

The Virgin boss is seeking a judicial review of the decision to hand the franchise to run the West Coast Main Line to his rival, which bid £2billion more.

Sir Richard branded the Government’s decision this month ‘insane’, claiming First Group bid too much and will either pull out of the franchise early or go bust.

The billionaire entrepreneur appealed to David Cameron to intervene, and called for the contract to be examined by MPs.

The business magnate has repeatedly expressed concerns that FirstGroup would not be able to live up to its financial and service-providing targets for West Coast.

FirstGroup, under the name First West Coast Limited, is due to take over the franchise from 9 December and to operate the service until 2026.

The West Coast Main Line route serves 31 million passengers travelling between London, the West Midlands, the North West, North Wales and the central belt of Scotland.

Anger: Sir Richard launched a court in a bid to to prevent the Government stripping his Virgin group of its lucrative rail franchise

Anger: Sir Richard launched a court in a bid to to prevent the Government stripping his Virgin group of its lucrative rail franchise

Virgin has run the franchise since 1997, during which time passenger numbers doubled.

FirstGroup has said it would introduce 11 new 125mph six-car electric trains on the Birmingham to Glasgow route and provide more direct services between destinations, as well as introduce better wi-fi and food.

FirstGroup has said it wants to proceed ‘without delay or disruption’ and would continue to prepare to start running the franchise later this year.

Mr Branson could face MPs on the Commons transport select committee as early as next week to argue that the decision to award the franchise to FristGroup was flawed.

But Ms Villiers told MPs the bid by FirstGroup would offer ‘significant improvements’ for passengers.

She said: ‘The West Coast Main Line is one of the most important intercity rail passenger routes in the country and it is also a valuable public asset.

‘Over the last decade and more, taxpayers have invested £9bn to upgrade the infrastructure.

‘It is a profitable franchise for the current operator and after significant public investment in the line the Government is rightly seeking to get a substantial return for passengers and taxpayers.’

A spokesman for Virgin Trains said the company did not want to comment on the announcement. ‘We are just waiting for the judicial review’, he said.

A FirstGroup spokesman said: ‘The Department for Transport’s (DfT) process rigorously examined and tested the bids in detail.

‘The DfT have said that despite the legal challenge, which they intend to defend robustly, they expect to sign the contract soon.

‘Our focus is to ensure a smooth transition with continuity for staff and passengers alike.

‘We intend to get on with our preparations to start the new franchise on 9 December so that we can deliver the many benefits and improvements that we are offering without delay or disruption.’

 

The comments below have not been moderated.

Before Bob from Bridport gets in again, Virgin don’t run services from Aberdeen to Penzanace as he said so many times in the last article. That is run by a different company who replaced Virgin as operator some years ago.

Joe Edwards
,

Bristol,
04/9/2012 06:04

“A good deal for passenger”? Well thousands of passengers signed the online petition against this and were never asked if they wanted the company transporting them to be one with a flawed track record of poor service and reliability with the highest number of passenger complaints to take over from a company that has managed on the whole to improve the service beyond recognition. It’s not perfect and there are still improvements to be made but awarding this franchise to First Group is a backward step for passengers and not a “good deal”
Whatever you think of Richard Branson and lets be honest here he does polarise views of people and politicians his train company has served the West Coast line and its passengers well.

Just one little cog
,

Who knows anymore,
04/9/2012 06:02

LOL, let the fun begin.
Bet it is going to be a ‘closed’ court case so that the public never find out what has really gone on.

bob
,

china,
04/9/2012 04:39

It’s time the govt bought back all our infrastructure services, mostly now owned by foreign companies. If they can all be very profitable then so can govt run companies, then all our bills can be reduced.

jo-jo was a man
,

bahrain,
04/9/2012 04:31

I hope Richard Branson is making this challenge ,with facts that back up his claim that first group will be unable to supply the service ,that benefits the customers and his employees ,nobody wishes for a worse service for customers and employees just because the Goverment wants to save money at customers and employees expence ,an open and fair hearing is required because of these reasons,nobodys face should be saved in this argument

les woodward
,

essex uk,
04/9/2012 03:46

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