Virgin and DfT in talks on West Coast franchise extension
By Richard Johnstone | 15 October 2012
Virgin Trains is set to continue running trains on the West Coast mainline for at least another nine months following the government’s decision to scrap the deal awarding the line to rival operator First Group.
Transport Secretary Patrick McLoughlin said today the department would negotiate an agreement with Virgin to allow the company to maintain rail services on the line for a temporary period. Earlier this month, he cancelled the contract with First due to errors made by the Department for Transport in the bidding process.
Virgin’s extension is expected to last between nine and thirteen months while a new competition is run for a short interim franchise on the line, open to all bidders. A full franchise will then be awarded at a later date once the inquiries into the initial award have been completed, and any reforms implemented.
Virgin’s current deal is due to expire on December 9, and a DfT spokesman told Public Finance financial details of the extension are still being negotiated. However, it is expected to be broadly similar to the existing terms, which saw the operator pay around £160m to government in the last financial year.
The spokesman added the decision to then award a short interim contract was deemed to be ‘the best way forward’ in preparation for the longer franchise.
McLoughlin said: ‘The cancellation of the InterCity West Coast franchise is deeply regrettable and I apologise to the bidders involved and the taxpayer who have a right to expect better.
‘My priority now is to fix the problem and the first step is to take urgent action to ensure that on December 9 services continue to run to the same standard and passengers are not affected. I believe Virgin remaining as operator for a short period of time is the best way to do this and my officials and I will be working flat out to make this happen.’
Responding to the announcement, Virgin Trains said it would now be able to ‘offer customers some short-term continuity’.
The company’s statement added: ‘We will now be working hard to make sure we continue to provide the service that has made us successful. Virgin Trains is grateful for the fantastic support from customers and staff over recent months.’
McLoughlin has ordered two independent reviews following the cancellation of First’s award.
The first, led by Centrica chief executive Sam Laidlaw, is examining the lessons to be learned from the department’s handling of West Coast competition and is due to be published by the end of the month.
The second, undertaken by Eurostar chair Richard Brown, is to examine whether changes are needed to the way risk is assessed in the wider rail franchising programme. This is expected to report back by the end of December.
Pending the outcome of these inquiries, McLoughlin suspended three on-going competitions on the Essex Thameside, Great Western and Thameslink franchises.