19th October 2012
- Virgin Trains has been asked to continue running the troubled West Coast Main Line for about a year,
- Go-Ahead’s chief executive defends Britain’s rail franchising process as “not broken” in spite of the mistakes made;
- The transport secretary has published the terms of reference for the two investigations into franchising.
Industry developments this week
Virgin Trains has been asked to continue running the troubled West Coast Main Line for about a year, the Government said this week. [The Times]
- The [Financial Times] describes the settlement as “a short-term fix” that could still have European competition law implications.
- The taxpayer cost of the fiasco could soar beyond the original £40m estimate because of potential FirstGroup legal action, the [Manchester Evening News] reports.
- The [Financial Times] quoted critics as saying that a decision to save £1m in consultants’ fees led to problems that forced the government to scrap the West Coast main line contract, critics have said.
Further reaction from industry figures and politicians was reported this week:
- David Brown, chief executive of Go-Ahead, has told the [Financial Times] the country’s rail franchising process “is not broken” in spite of the mistakes made in the West Coast main line competition.
- Nigel Harris, in [Rail magazine], argues in an extensive editorial that FirstGroup could reasonably claim copensation for the entire life of the 15-year franchise that it has now been denied. He also points to rumours that all bidders for the West Coast franchise “were not all given the same, consistent information”.
- Last week in the House of Lords former transport secretary Andrew Adonis described the franchise collapse as “probably the single biggest failure in British public policy since the poll tax”. [Railnews]
Transport secretary Patrick McLoughlin has published the terms of reference for the two investigations he has commissioned following his decision to scrap the franchise competition. [Transport Briefing]
- [Transport Briefing] also examines the franchising steps to be played out throughout 2013.
Private Eye devotes a full page of coverage to the West Coast franchise cancellation and further ramifications for the DfT. The magazine
- asks why it took legal action by Virgin to get the government to acknowledge flaws in the system [Link]
- examines how franchise bid costs have multiplied since 2006 [Link]
- points to former transport secretary Alistair Darling’s decision to bring franchising in-house [Link]
- argues DfT’s troubles extend to other areas of rail policy, such as rolling stock [Link]
New rail services
A new Chiltern rail link between London and Oxford is set to open in 2015 after the government approved the £130m scheme. [Financial Times]
The Rail Delivery Group has secured the backing of the ORR and the transport secretary to take on a formal role within the railway sector. [Transport Briefing]
Free wi-fi at London Underground stations is to continue for the rest of the year. [BBC News]
London’s transport commissioner has claimed a 1% cut in fares could reduce the money available to Transport for London for capital investment projects by £340m over 10 years. [Transport Briefing]
Finance, business and sharecheck
FirstGroup shares soared in late July and early August as rumours began to circulate it had won the West Coast mainline franchise. They fell by more than a quarter after the process was subsequently cancelled in late September.
Passenger numbers were up but sales revenue down in the third quarter of 2012 for Eurostar, with the operator blaming a pre-Olympic slump. [Railnews]
Directly Operated Railways, the parent company of East Coast, has reported pre-tax profits of £7.1m on revenue of £665.m [RAIL]
Go-Ahead has said it wanted to make profits of £100 million a year from running bus services in Britain. [The Times]