By Richard Johnstone | 19 June 2014
Virgin Trains will continue running trains on the West Coast mainline for a further two years and nine months, with the firm agreeing to pay the government more than £430m to run the franchise.
The extension is the second contract to be awarded directly to Virgin after the Department for Transport had to scrap an award of the line – which runs between London, Birmingham and Glasgow – to rival First Group in October 2012.
The original extension to November 2014 was intended to allow a franchise competition to be held for a short interim franchise. However, following a review of the rail franchise system, the government has decided to further extend Virgin’s deal ahead of a full franchise bid process so bidding competitions across the industry are staggered to reduce the risk of further errors.
Under the contract, Virgin has also agreed to make £35m worth of improvements, including introducing free wi-fi at stations. The operator will also bring forward plans to run direct services from London to Shrewsbury and Blackpool from December.
Transport Secretary Patrick McLoughlin said: ‘This deal will provide thousands more seats and better journeys for the tens of thousands of passengers who use these services every day.
‘The West Coast provides a vital artery between London and Scotland and it is crucial we do everything we can to improve services on this much-used route. This is further proof of our commitment to get the best deal for passengers and taxpayers with Virgin set to pay more than £430m to run the franchise.’
• Also today, the DfT announced that the government’s 40% stake in cross-channel train operator Eurostar has been transferred to the Treasury. McLoughlin said the switch has taken place to address any perceived or actual conflict of interests resulting from the government’s stake in Eurostar and the award of the east coast rail franchise.
Eurostar has been shortlisted by the DfT for the re-privatisation of the east coast mainline, where a decision is expected soon over who will take over the line from state-owned East Coast in February 2015.
The coalition has also committed to sell the stake in the operator – held through a government body called London and Continental Railways – as part of a plan to raise as much as £20bn from privatisations by 2020.
A DfT spokesman told Public Finance that the switch did not alter the sale plans.
‘There is no long-term intention for the UK government to retain the stake in Eurostar,’ he said.
‘A feasibility study is underway but no firm decision has been taken [on proceeding with a sale]. That decision is now for Treasury to take.’
