THE UK government is preparing to nationalise the West Coast rail line if Virgin’s legal challenge to losing the franchise means an operator has not been appointed by the handover date.
Rival operator FirstGroup, which is based in Aberdeen, won the franchise last month after outbidding Virgin Trains in the renewal auction.
However, Virgin’s campaign for a judicial review of the UK government’s decision has delayed the signing of the contract and could put back the handover, which was due to take place on 9 December, indefinitely.
Virgin Trains, a joint venture of entrepreneur Sir Richard Branson’s Virgin Group and Perth-based trains and buses operator Stagecoach, claims its bid offered “better services to passengers and more secure deal for taxpayers”, although the government was offered more than £1 billion more from FirstGroup for the 14-year contract.
Some analysts were surprised by FirstGroup’s bid and questioned the passenger and revenue growth forecasts it used to justify its offer, but the Scottish transport giant has stood by its figures.
With the dispute set to drag on, Branson has offered to run the service free of profits in the interim, until a handover or otherwise is agreed. However, that it likely to be unpalatable to FirstGroup and ministers are considering stepping in and running the service through a state-owned company, Directly Operated Railways (DOR).
DOR is already running the East Coast service, which was nationalised in 2009 after National Express pulled out.
A spokesman for the Department of Transport said the time when it might need to nationalise the service were still some way off, but confirmed contingencies were being considered.
He said: “In view of the legal challenge from Virgin Trains, we are looking at our responsibilities under Section 30 of the Railways Act and in view of the circumstances it is only prudent to increase our focus on contingency planning.”
Section 30 of the Railways Act requires ministers to ensure the ongoing operation of stations and services.
Bosses of FirstGroup and Virgin are due to face MPs at the transport select committee this week to give further details of their bids to run the West Coast franchise.
However, the hearing is not expected to resolve the matter, which will then go to a series of legal hearings.
A spokesman for Virgin Trains acknowledged that temporary nationalisation was an option for the government, but claimed it would be less disruptive to take up Branson’s offer.
“The offer made by Sir Richard would be on a non-profit basis and would see the service run in the same way as it has been. It would save the cost of transferring it across to DOR and then transferring it again once the dispute is resolved.”
He said Virgin did not yet know how long the challenge might take.
“Once the [transport select] committee has heard from us and from FirstGroup we will have some clarity on it,” he said.
No-one at FirstGroup was available for comment.
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