Richard Branson halts £13 billion West Coast rail deal in its tracks

A LEGAL challenge from Virgin Rail has delayed the UK government’s controversial plans to hand a multi-billion pound contract to rival bidder FirstGroup.

Rail minister Theresa Villiers said the government would “robustly” defend the legal case following the decision to award the West Coast Mainline contract to FirstGroup as she announced the delay in the Commons on Monday.

Coalition ministers had been expected to sign the 13-year contract with Aberdeen-based First Group, worth £13.3 billion, several days ago. However, Ms Villiers confirmed that due to the legal challenge, the contract had not been signed and “the competition remains live”.

Sir Richard Branson’s Virgin, which has run the West Coast Main Line since 1997, launched the challenge last week after losing its attempt to continue operating the route when ministers opted to hand the deal to FirstGroup.

But ministers have come under pressure from Labour at Westminster to defer signing the contract so that MPs can examine the deal. More than 165,000 people have signed an online petition calling for the decision to give the contract to FirstGroup to be reconsidered.

But Ms Villiers insisted the bid by FirstGroup would offer “significant improvements” for passengers as she informed MPs about the delay.

She said: “As a result of a legal challenge, which the government intends to defend robustly, we have not yet signed the contract with First West Coast, and consequently the competition remains live.

“The West Coast Main Line is one of the most important intercity rail passenger routes and it is also a valuable public asset.

“Over the last decade and more, taxpayers have invested £9bn to upgrade the infrastructure. It is a profitable franchise for the current operator and after significant public investment in the line, the government is rightly seeking to get a substantial return for passengers and taxpayers.

“Taken together, I believe that the commitments in First West Coast’s bid represent significant improvements for passengers and will provide a good return for the taxpayer.”

However, the Conservative minister refused to reveal details of FirstGroup’s bid to take over the running of the line on 9 December this year. She said: “I cannot give the full commercial details of the winning bid, or indeed of the other bids.”

The First West Coast bid would provide more trains on the route, with 12,000 extra seats per day from December 2016, new services and station upgrades. FirstGroup has also said that it would introduce 11 new 125mph six-car electric trains on the Birmingham to Glasgow route and provide more direct services between destinations, as well as improving the provision of wi-fi and food.

The firm has said that it wanted to proceed “without delay or disruption” and would continue to prepare to start running the franchise on 9 December.

A FirstGroup spokesman said: “The Department for Transport’s process rigorously examined and tested the bids in detail.

“The DfT have said that despite the legal challenge, which they intend to defend robustly, they expect to sign the contract soon. Our focus is to ensure a smooth transition with continuity for staff and passengers alike.”

Virgin Rail has previously accused Transport Secretary Justine Greening of acting “unlawfully”, “irrationally” and against EU law by awarding the contract to First Group.

A Virgin spokesman welcomed the delay and said that the rail operator was now “waiting to see what the next stage” of the legal process was.

Scottish Labour transport spokesman Richard Baker also welcomed the move as he called for a fresh look at the decision on the West Coast franchise.

Mr Baker said: “Obviously this is a key decision for Scotland, and given the importance and cost, it’s right that the decision will be taken after more formal consideration. The fact that there is now more time to debate the bid has to be positive as we can’t afford to get this decision wrong given the importance of the service connecting between Scotland and the rest of the UK.”