The great west coast mainline gamble
At Rugby station you can see why Virgin Rail and Sir Richard Branson are so angry with the government after it handed its west coast rail franchise to First Group. Not just new high speed trains stopping, but speeding through Rugby every five minutes at 125 miles per hour between London, Birmingham, Manchester and Glasgow. There’s an entirely new infrastructure and station. Passenger numbers have doubled to more than 30 million across the network, as other mainlines have decayed.
As Sir Richard told Jon Snow tonight: “It’s just astounding that the Ministry of Transport signed off on this particular contract with this particular company who is about the only company ever who have had its own passengers go on strike against it.” He added: “Right now we’ll back out of rail in Great Britain unless we get a call from David Cameron saying ‘sorry’.”
Sir Richard Branson’s Virgin was one of the pioneers of rail privatisation in 1997 running the line connecting London with Manchester, Liverpool and Glasgow. But First group, which already runs trains on the Great Western and Thameslink lines, bid about £750m more for the new 14-year franchise on the west coast. Sir Richard says he was astonished by the numbers underpinning the First bid, and the government’s willingness to ignore passenger revolts on First’s mainline service between London and Cornwall.
The west coast’s new boss promised some cheaper full fares, more passenger capacity, and free internet.
The West Coast mainline is just the first of a flurry of franchises up for grabs on long term contracts
Seventy per cent of the country’s rail service will be put out for tender over the next two years, including the Great Western line, Northern and Greater Anglia lines. Also up for new bidders is the east coast Mainline, formerly Britain’s busiest inter-city rail line.
The east coast line is now run by the government, twice requiring a bailout after rail companies that bid too much went bust. It is this spectre that looms over today’s auction. Virgin argues that First’s numbers rely on unrealistic passenger growth in the mid 2020s.
Last year, First itself handed back its great western franchise three years ahead of schedule. Again back to Sir Richard: “[The government] should have taken into account Virgin’s track record of delivering and deliverability, and realised that we would actually give the government £6bn over the course of the franchise. That’s £6bn the government would get, rather than having somebody who miraculously says he can get £1.5 to £2bn in the last two or three years, having that person just reneged on another two or three years of another contract.”
The government says it is covered by a £295m bond. Rail minister Theresa Villiers went as far as reminding Channel 4 News that Virgin had its own problems on its CrossCountry franchise and had to renegotiate the West Coast Line in 2002. For his part Tim O’ Toole at First Group says that comparisons between the relative luxury of a Virgin train and the cramped inefficiency of the London-Bristol mainline are unfair. The west coast main line had huge public investment into its track and stations; that will now come to the great western line.
By filling off peak trains, First says it can grow passenger revenue by more than 10 per cent for over a decade. It did manage something similar with its Transpennine franchise. But frankly how much is a passenger projection for 2024 – 26 worth? Was this really the deciding factor between First and Virgin? Sir Richard seems to think so. If he’s right then this is a gamble way in to the future for a new fat controller and for the government.
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