Sir Richard Branson tells Channel 4 News Virgin will stop operating trains in Britain unless David Cameron apologises for the system which awarded the west coast main line franchise to FirstGroup.
Speaking to Channel 4 News presenter Jon Snow, Sir Richard said that the government’s system for procuring rail contracts is flawed, and that the government had had the “wool pulled over its eyes” by First Group – a company that he said had told the government it could deliver “unsustainable” passenger numbers.
“I think right now we will back out of rail in Great Britain,” he said, “unless we get a call from David Cameron who says ‘Sorry, and we will construct a system that has the faith of British operators.'”
Sir Richard said his company had “delivered” on the west coast line, and had said it would be able to deliver £6bn to the government over the 20-year life of the contract up for negotiation. “That is £6bn the government would have got.”
But he poured scorn on FirstGroup’s deal, in which it is said to have promised to deliver £1.5bn in the last three years of the contract, saying: “We are talking about passenger numbers that are completely unsustainable or a doubling of fares.”
Announcing the new franchise winner, Rail Minister Theresa Villiers said the new franchise would deliver “big improvements for passengers, with more seats and plans for more services”.
But the RMT transport union warned of “massive cuts to jobs and passenger services and huge increases in fares”.
Virgin has operated the west coast line for 15 years, introducing tilting high-speed Pendolino trains to the route and increasing passenger levels from around 13 million a year in 1997 to around 31 million a year now.
Virgin Rail is 49 per cent owned by another giant transport company Stagecoach, which said today that it was disappointed that its bid with Virgin to continue running the franchise had been unsuccessful.
It said it understood that Virgin was the Department for Transport’s (DfT) second-choice bidder and that that the reason it failed to win the new franchise was “because another bidder contracted to pay significantly higher premiums to the DfT”.
FirstGroup chief executive Tim O’Toole said the company was delighted to win the franchise.
He went on: “We will be making significant improvements including reduced journey times and introducing new direct services.”
The deal will see the introduction, from December 2016, of 11 new six-car electric trains which will enable more seats to be provided across the franchise, including greater capacity on the Birmingham to Scotland route.
New services are planned from Blackpool, Telford, Shrewsbury and Bolton to London. FirstGroup has also committed to cut the cost of West Coast standard anytime fares by an average of 15 per cent within the first two years.
The franchise stretches from London to Glasgow, connecting many of the UK’s major cities including Manchester, Liverpool, Birmingham, Wolverhampton, Edinburgh, Lancaster and Chester.
The DfT said the franchise deal was worth £5.5bn over the lifetime of the contract. The new franchise will begin on 9 December and will run for 13 years and four months.
Ms Villiers said: “This new franchise will deliver big improvements for passengers, with more seats and plans for more services.
“Targets to meet on passenger satisfaction will be introduced for the first time in an inter-city rail franchise and passengers will also benefit from smart ticketing and from investment in stations.
“The west coast is the first of the new longer franchises to be let by the coalition which has helped us secure real benefits for passengers by encouraging First West Coast Limited (as the company will be named) to invest in the future of the service.”