Posted 15th October 2012 | 10 Comments
Virgin to lead three-stage West Coast repair?
THE GOVERNMENT has named Virgin Trains as the most likely operator of intercity services on West Coast after 8 December, and officials are now said to be working 'flat out' to agree terms for a temporary contract of between 9 and 13 months. This would then be followed by two more contracts.
The emergency solution -- already dubbed a 'total shambles' by Labour -- has emerged after the collapse of the West Coast franchise award to FirstGroup on 3 October, which was caused by failures within the DfT.
Transport secretary Patrick 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 the 9 December 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."
The framework now planned will consist of three successive contracts. The first, which is being negotiated with Virgin, would last for up to 13 months. The second will be a short 'interim' franchise of perhaps two years, open to any bidder, and finally a long-term contract which is expected to run until about 2026.
It is not yet clear how the first, emergency contract would work, and in particular whether it might be on a 'not for profit' basis. Virgin said it believes a short-term agreement would not breach European procurement laws, but the exact terms have yet to be agreed.
FirstGroup has not revealed whether it is considering legal action claiming compensation for its loss of the West Coast contract, but a company spokesman said today: "We believe the private sector provides the most effective and efficient way to deliver passenger rail services in the UK. We await the outcome of the independent investigations into the ICWC franchise competition and the wider rail franchising process, which we hope will provide a greater degree of certainty and confidence."
The announcement of an expected Virgin extension was condemned by the RMT union, whose general secretary Bob Crow said: "We are now told Virgin will cling on for a few months while an expensive, short term franchise competition is run before a further costly, long term contract exercise. We could end up with the nightmare of three different franchise holders in a few years on our most high profile rail route while tens of millions of pounds is wasted on the franchise merry go round and thousands of staff are caught in the cross fire.
"This is pure lunacy and all designed to block the logical and stable option of public ownership."
Meanwhile, while talks with Virgin continue, the question of the eventual bill for the taxpayer is also outstanding. A figure of £40 million has been quoted by the DfT, which is refunding the money spent by the four bidders last time round, but there are fears that it could be considerably higher when all the associated expenses have been taken into account, including Departmental time and legal costs.
Reader Comments:
Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.
Darren Taylor, Brightlingsea
Common sense has prevailed , Virgin should never have lost the franchise in the first place. Keep up the good work Virgin.
jak jaye, leamington spa
Total shambles agree with Tony,Reading too.No one other then Virgin will put in for the interim franchise for a start,surely the simplest way would have been to take WCML back into public ownership( and leave it there.) but as we know Governments don't do simple.How many more times must this useless bunch of so called rail experts have to be told the franchise system aint going to work,whats the old saying? 'You can take a horse to water but cant make it drink'
Still this is what happens when you give second rate bus companies a railway to play with
Melvyn Windebank, Canvey Island, Essex
Ah well Richard Branson can carry on getting his free adverts for his airline on WCML trains and stations!!
I reckon next time no one other than Virgin should put in a bid in fact no one should bid for any rail franchises!!
Geoff, NORTHAMPTON
Why have an interim franchise at all with all the costs that this will entail and the ongoing uncertainty that this will bring to all the staff? This is madness and in my view a panic measure by the Transport Secretary who clearly does not understand the business of running trains but won't let go either.. Surely, having decided to review the whole franchising process it would be better to negotiate an extension to the existing franchise until such time as the two reports commissioned by the SOS have been considered and a new approach agreed. By having an interim franchise suggests to me that the DfT is pre-empting the outcome of the investigation by Richard Brown before it has barely started and that whatever the outcome an option to bring the WCML back into public ownership is not an option that this Government wants consider at any cost.
Gordon, Glasgow
I still love all the comments about First considering legal action given their costs after the award in preparing to take over but I have no sympathy. First rule of business, especially in the public sector, is that you don't do anything without a contract. It wouldn't exactly be a shame if they'd spent millions and went under because of their own stupid mismanagement.
Billy Bell, Beith, UK
The DfT know that 'first' can't rock the boat too much because they operate other franchises' which are due for renewal in the near future.
Just look at the number of franchises awarded to national express after they fell out with the DfT.
This is a Billion pounds game of chess!
oh......and why don't they just issue a long term franchise and forget about the 'small' shorter term?
Tony Pearce, Reading
It looks as if the Government is just now in total panic mode. They should have let Virgin take them to the Courts. The Judge would then have ruled (not necessarily in Virgin's favour) saying X,Y and Z weren't quite right, and ordered (probably) the DfT to rerun the bidding procedure taking into account his recommendations. Then no egg on Governments face and a legal ruling as to what was right and wrong in the bidding process. But the Government got frightened (having a new boss didn't help) and we now have the mess which is getting bigger by the day.
lorentz, London
I expect National Express will be looking at its options after what has come to light.
les, Manchester
Maybe First will carry on with FGW in a similar way.
Lee, Manchester
Wonder what First group think about this? Wouldn't it be ironic if they now mounted a challenge to the 'short-term' contract?