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| Virgin to run west coast trains for another year | Virgin to run west coast trains for another year |
| (30 days later) | |
| Virgin will continue to run trains on the west coast mainline for the next year, the transport secretary Patrick McLoughlin has confirmed, but opponents and lawyers warned that his decision could be storing up more legal and political problems for the future. | Virgin will continue to run trains on the west coast mainline for the next year, the transport secretary Patrick McLoughlin has confirmed, but opponents and lawyers warned that his decision could be storing up more legal and political problems for the future. |
| McLoughlin told the Commons he would be "commencing negotiations with Virgin" to run the route "subject to ensuring value for money for taxpayer". He said passengers would not be affected by the franchising fiasco that saw the lucrative London to Glasgow service awarded to FirstGroup before a judicial review sought by Virgin stopped the contracts being signed. | McLoughlin told the Commons he would be "commencing negotiations with Virgin" to run the route "subject to ensuring value for money for taxpayer". He said passengers would not be affected by the franchising fiasco that saw the lucrative London to Glasgow service awarded to FirstGroup before a judicial review sought by Virgin stopped the contracts being signed. |
| McLoughlin praised FirstGroup and Virgin and restated the "government's commitment to ensuring we have private sector innovation in the railways", promising to restart the franchising programme as soon as possible. | McLoughlin praised FirstGroup and Virgin and restated the "government's commitment to ensuring we have private sector innovation in the railways", promising to restart the franchising programme as soon as possible. |
| The arrangement extends Virgin's current contract for between nine and 13 months and resolves the immediate question of who runs the trains after 9 December. The alternative – asking the government-owned Directly Operated Railways (DOR) to run the route – would have seen both the major north-south rail arteries in state hands. | The arrangement extends Virgin's current contract for between nine and 13 months and resolves the immediate question of who runs the trains after 9 December. The alternative – asking the government-owned Directly Operated Railways (DOR) to run the route – would have seen both the major north-south rail arteries in state hands. |
| While Virgin continues to run trains on the route, a franchise competition will be heldto cover a subsequent interim period in which the long-term future of the line is decided. | While Virgin continues to run trains on the route, a franchise competition will be heldto cover a subsequent interim period in which the long-term future of the line is decided. |
| Senior industry sources said it seemed to be a "foregone conclusion" that the incumbent would stay in place until a long-term handover. However, Sir Richard Branson's firm will be aware of the recent award of a two-year Greater Anglia franchise to the Dutch operator Abellio, whose winning bid was seen as a loss-leader to get a foothold in UK rail with a view to future contracts. | Senior industry sources said it seemed to be a "foregone conclusion" that the incumbent would stay in place until a long-term handover. However, Sir Richard Branson's firm will be aware of the recent award of a two-year Greater Anglia franchise to the Dutch operator Abellio, whose winning bid was seen as a loss-leader to get a foothold in UK rail with a view to future contracts. |
| The shadow transport secretary, Maria Eagle, said the solution was a "complete mess" and accused McLoughlin of trying to deflect blame for the "embarrassing debacle" on to officials when cost-cutting ministers were to blame for losing key staff and cancelling an audit. She said the fiasco was "pouring tens of millions of taxpayers' money down the drain". | The shadow transport secretary, Maria Eagle, said the solution was a "complete mess" and accused McLoughlin of trying to deflect blame for the "embarrassing debacle" on to officials when cost-cutting ministers were to blame for losing key staff and cancelling an audit. She said the fiasco was "pouring tens of millions of taxpayers' money down the drain". |
| Lord Adonis, a former transport secretary, tweeted that the "omnishambles" would mean "huge further cost and instability". | Lord Adonis, a former transport secretary, tweeted that the "omnishambles" would mean "huge further cost and instability". |
| Unions denounced the arrangement as an "ideological stitch up", while lawyers warned that the solution posed as many problems as it solved. | Unions denounced the arrangement as an "ideological stitch up", while lawyers warned that the solution posed as many problems as it solved. |
| Patrick Twist, of the legal firm Pinsent Masons, said: "It is not obvious that the short term nine-13 month contract, which is now being proposed to be entered with Virgin, should not be open to competition under procurement law." | Patrick Twist, of the legal firm Pinsent Masons, said: "It is not obvious that the short term nine-13 month contract, which is now being proposed to be entered with Virgin, should not be open to competition under procurement law." |
| He added that the interim franchise contract would also be controversial. "FirstGroup, and others, may argue that it is of such a short duration that Virgin Rail, as the incumbent operator, has a disproportionate advantage in bidding for it. Though the interim contract is ostensibly being competed, they may say that there it is not the level playing field required by procurement law." | He added that the interim franchise contract would also be controversial. "FirstGroup, and others, may argue that it is of such a short duration that Virgin Rail, as the incumbent operator, has a disproportionate advantage in bidding for it. Though the interim contract is ostensibly being competed, they may say that there it is not the level playing field required by procurement law." |
| Analysts suggested there may be implications from the decision for the other paused franchise competitions – possibly seeing the services passed, at least temporarily, into state hands. | Analysts suggested there may be implications from the decision for the other paused franchise competitions – possibly seeing the services passed, at least temporarily, into state hands. |
| Gerald Khoo, of Espirito Santo, said: "We believe this decision has been driven by concerns at the DfT [Department for Transport] that it may not be legal to extend a rail franchise agreement more than once. Great Western and Essex Thameside have both already been extended. Therefore, we would view these franchises as being at risk of either being transferred to DOR or being the subject of competitive tenders for any short-term extension." | Gerald Khoo, of Espirito Santo, said: "We believe this decision has been driven by concerns at the DfT [Department for Transport] that it may not be legal to extend a rail franchise agreement more than once. Great Western and Essex Thameside have both already been extended. Therefore, we would view these franchises as being at risk of either being transferred to DOR or being the subject of competitive tenders for any short-term extension." |
| The long-term franchise the DfT was set to award to FirstGroup was officially scrapped on 3 October after the department uncovered "significant technical flaws" while preparing to defend a lawsuit brought by Virgin. The government blamed civil servants for incorrectly assessing the level of risk in First's winning bid. | The long-term franchise the DfT was set to award to FirstGroup was officially scrapped on 3 October after the department uncovered "significant technical flaws" while preparing to defend a lawsuit brought by Virgin. The government blamed civil servants for incorrectly assessing the level of risk in First's winning bid. |
| McLoughlin also paused the competitions for other franchises, including Essex Thameside, Great Western and Thameslink, and set up two reviews, which he said on Monday were "well under way". The first, led by Sam Laidlaw, will examine the mistakes in the west coast competition. A second, by Richard Brown, will look at the implications for rail franchising as a whole. | McLoughlin also paused the competitions for other franchises, including Essex Thameside, Great Western and Thameslink, and set up two reviews, which he said on Monday were "well under way". The first, led by Sam Laidlaw, will examine the mistakes in the west coast competition. A second, by Richard Brown, will look at the implications for rail franchising as a whole. |
| A Virgin spokesman said: "Customers have made it clear that they want Virgin to continue. We are delighted to have the chance to continue delivering our excellent service." | A Virgin spokesman said: "Customers have made it clear that they want Virgin to continue. We are delighted to have the chance to continue delivering our excellent service." |
| In a statement, FirstGroup merely affirmed its commitment to keeping the railways in the private sector. | In a statement, FirstGroup merely affirmed its commitment to keeping the railways in the private sector. |
| "We believe the private sector provides the most effective and efficient way to deliver passenger rail services in the UK. We await the outcome of the independent investigations into the ICWC [InterCity West Coast] franchise competition and the wider rail franchising process, which we hope will provide a greater degree of certainty and confidence not only to future bidders, but to employees, stakeholders and the travelling public too." | "We believe the private sector provides the most effective and efficient way to deliver passenger rail services in the UK. We await the outcome of the independent investigations into the ICWC [InterCity West Coast] franchise competition and the wider rail franchising process, which we hope will provide a greater degree of certainty and confidence not only to future bidders, but to employees, stakeholders and the travelling public too." |
| The RMT general secretary, Bob Crow, said: "This announcement is no surprise. The government are ideologically opposed to public ownership of the railways and … have stitched up a shabby deal that will enable them to rerun the whole franchise fiasco in a year's time." | The RMT general secretary, Bob Crow, said: "This announcement is no surprise. The government are ideologically opposed to public ownership of the railways and … have stitched up a shabby deal that will enable them to rerun the whole franchise fiasco in a year's time." |
| He added: "Richard Branson and his shareholders are laughing all the way to the bank. Not only have they made hundreds of millions from the rail privatisation lottery but they have now scooped the rollover as well." | He added: "Richard Branson and his shareholders are laughing all the way to the bank. Not only have they made hundreds of millions from the rail privatisation lottery but they have now scooped the rollover as well." |
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