Branson accuses Greening of 'insanity' over rail bid decision

FirstGroup's huge bid means company will either go bankrupt or have to cut service, says Virgin boss

Column LAST UPDATED AT 08:32 ON Wed 15 Aug 2012

SIR RICHARD BRANSON has accused the Transport Secretary Justine Greening of "insanity" after his Virgin Trains company lost Britain's most lucrative rail franchise, the West Coast mainline service, to rivals FirstGroup.

He claims FirstGroup won the contract only by putting in an absurdly high bid that will either bankrupt the company or lead inevitably to a seriously reduced service as FirstGroup struggles to make it profitable.

But while Branson can be accused of sour grapes, he is not the only one laying into Greening this morning – and David Cameron's one-time "poster girl" could well end up paying the political price.

This morning's announcement of FirstGroup's successful bid comes 24 hours after it was announced that rail fares across the country will rise in the New Year by an average six per cent, while some commuters face whopping fare rises of 11 per cent.

As a result, passengers and rail unions were already calling for Greening's head.

Now they say that if FirstGroup has overbid for the franchise, services inevitably will suffer as the company tries to cut operating costs. FirstGroup is promising the Government a £5bn return on the franchise between 9 December this year when they take over and 2026 when the contract expires.

Virgin Trains, which is 49 per cent owned by bus and train company Stagecoach, has run the franchise since the railways were privatised in 1997 and could mount a legal challenge.

But Greening is facing a political challenge from Lib Dem coalition partners who are furious that the Tories are raising rail fares just when Britain should be doing more to encourage commuters to leave their cars at home.

Greening yesterday promised to press Chancellor George Osborne for more money in the autumn spending round to avoid the full impact of the fares rise formula of inflation plus three per cent. "I am keen to see what we can do to keep fares down to something affordable," she said. "I will be looking at whether there is a way of doing this in the autumn."

She had better win her argument with Osborne if she hopes to save her skin.

The latest increases are triggered by the unexpectedly high increase of 3.2 per cent in the July inflation figures released on Tuesday. But underlying the row is the relative inexperience of Greening and her deputy, Theresa Villiers.

Tory commentator James Forsyth reported in the Daily Mail in July that relations between comprehensive-educated Greening and Cameron had "soured" over her opposition to a third Heathrow runway to protect her west London constituency.

She may yet have to choose between looking stupid to her constituents or quitting her job, if the third runway scheme gets the go-ahead in the push for economic growth.

Older hands say she should never have got herself into this fix. The fares rise and the West Coast franchise are another fine mess she has landed herself in. · 

Disqus - noscript

History never teaches politicians anything, as a regular rail user I have to say that Virgin offers the best service of all operators and First Great Western the worst, doesn't bode well and I note Tim O'Toole failed to answer what First group would do to fares other than standard anytime which accounts for 20%, look for big increases in the other 80%.The bid is doomed to failure but none of those involved from First Group or the Government will be around to see the end of this franchise, so guess who will pay for the mess.Also will be interesting to see if anyone involved in the bid from the Government end up in non exec positions once they are out of office at the next election.

The facts are pure and simple: this farcical non-government continue to take the p*** out of all us long-suffering train users, be they commuters or leisure travellers, or whatever. Don't forget too, that these extortionate fare rises once or twice every year are also helping to pay for the ultimate white elephant that they're all so happy to press ahead with - the Rich Man's Folly that is the HS2 (too little too late too expensive), so there IS an underlying agenda to all of this madness. Besides, another solution would be to dismantle the useless ATOC and replace them with monkeys - they might do a better job. Too many of these chocolate teapot regulators are sitting by and letting these greedy fat cat corporate controllers get away with daylight robbery....something has to give and it will only do so if every single train user in this country stage a revolt and bombard their TOCs at the highest level to make their anger clear. But will this happen? Sadly, not in this climate of apathy of which we Brits are so renowned for.....and that is the worst of it. Since when did our successive transport ministers / secretaries become such gullible, naive, lily-livered, brown-nosing, clueless wimps??

I've yet to find an article that clarifies how the 5.5 billion pound bid
is to be paid back over the 13 year period as it's certainly not a lump
sum.