Comment: Keeping rail franchises on track can be tricky

This one involves a flagship cross-Border route, one of the UK’s highest-profile businessmen and Scotland’s largest transport operator. It also brings the whole issue of the future financing of the world’s oldest railway network into sharp focus.

FirstGroup was awarded the 13-year franchise to operate the West Coast mainline on 15 August, snatching it from a joint venture of Sir Richard Branson’s Virgin empire and Scots transport rival Stagecoach. But since then the celebrations at First’s Aberdeen headquarters have, it’s fair to say, hit the buffers.

The City appears divided on the merits of the £10 billion deal, with some analysts troubled by the group’s ambitious revenue projections for the new franchise, which is due to begin in December.

Branson has already dubbed the current franchise system “insane” and yesterday stepped up the rhetoric, making a last-ditch appeal to the UK government to delay signing the West Coast contract with FirstGroup.

The serial entrepreneur’s Virgin Trains venture has been running the London to Glasgow service for 15 years, in that time doubling annual passenger numbers. It is now offering to temporarily operate the route on a not-for-profit basis, if this would allow Parliament time to scrutinise the government’s decision to opt for First. Branson is also pressing for an independent audit of the franchise award to “ensure it has been based on correct criteria and reliable forecasting of customer numbers, revenue and payments to government”.

His plea comes after Louise Ellman, chairwoman of the House of Commons transport committee, wrote to transport secretary Justine Greening asking her to hold off signing the final contract, noting that “important issues” had been raised.

Writing in a Sunday newspaper, Branson argued that “it is far better for MPs to have the chance to debate the issues and question ministers on the detail before the decision is finalised”.

He added: “If this process means extending the current franchise beyond December for a few months, I and my partners at Stagecoach would happily run the extended franchise on a not-for-profit basis, or donate profits to charity.”

Clearly, Branson has got his nose out of joint over the affair and to many observers his remarks will be seen as mere sour grapes – FirstGroup boss Tim O’Toole last week branded the businessman’s objections as nothing but “histrionics”.

Yet there is a fundamental issue at stake regarding the financing of such a critical transport function as Britain’s railways and how far the taxpayer should be required to contribute.

The curse of the East Coast mainline, where previous franchise winners GNER and National Express over-promised and failed to deliver, should stand as a lesson to all.

FirstGroup and O’Toole’s management team are adamant that their sums can add up and, as one leading industry analyst points out, the bid could turn out to be “very profitable” if those calculations prove correct.

The firm is promising much, including improved wifi and catering, additional seating and services and a reduction in standard anytime fares by 15 per cent on average. It has already shown, with the sprawling ScotRail franchise, that it can make a decent fist of running a railway.

The government has indicated that it will not be swayed by Branson’s offer. His appeal for an independent audit has merit, but any review should take on a wider remit. It must be in the long-term interests of every passenger and every taxpayer to have those bigger concerns about rail franchise structuring addressed.

Home from home is the best place for a holiday

Just back from a short break in and around the North Yorkshire seaside resort of Whitby.

A full hotel, bustling cafés and queues at the many fish and chip shops dotting the quayside. Oh, and a packed steam train ride to nearby Pickering. And all on an overcast midweek day. It seems the staycation remains the lifeblood of British tourism.