First's risky win highlights fundamental problems with the rail network

Euston, we have a problem. Richard Branson found out today that Virgin Trains has lost the rail franchise for the West Coast Mainline to First Group. From 9 December, First plans to ‘offer substantial improvements in the quality and frequency of services’ on one of the country’s key arteries. This overhaul will bring in 11 new trains and 12,000 extra train seats by 2016. Branson is sore about his company’s loss, and has attacked the government’s ‘insanity’ for handing over the network to First:

Under our stewardship, the West Coast Mainline has been transformed from a public liability into a valuable asset for the UK, worth many billions of pounds. The service is a British success story and one to put up against rail companies around the world. It is a great shame that such a strong track record has been discounted in the evaluation process for one of the UK’s most important infrastructure assets. The country’s passengers, taxpayers and the West Coast employees deserve better.

These achievements have counted for little – as this is the fourth time that we have been out-bid in a rail tender. On the past three occasions, the winning operator has come nowhere close to delivering their promised plans and revenue, and has let the public and country down dramatically’

The billion dollar question is whether First will be able to deliver its upgrade promises and still turn a profit. Virgin offered £4.8bn to run the route till 2026, compared to £5.5bn for First Group — ‘a very very aggressive bid’ in the words of Virgin’s Tony Collins. First’s chief executive Tim O’Toole (who performed well as head of London Underground 2003-2009) hit back that his company ‘has a track record of winning deliverable bids’ and their bid represented the ‘fairest deal’ for taxpayers’.

But if £5.5bn is too much of a burden, First run the risk of treading the same path as National Express did on the East Coast service. The long-standing GNER service was terminated thanks to National Express’ overly ambitious bid to run the network for nine years. Just two years in, the franchise collapsed and the country’s second busiest train line was nationalised. There are differences between the bids — the National Express package had very little spare capacity while First’s 10 per cent annual growth does not seem unreasonable. There is the matter of High Speed 2. As we reported a few weeks ago, plans for the new network have gone suspiciously quiet. If HS2 doesn’t materialise, the West Coast line faces a problem when it reaches capacity in 2026. If First Group find either of these insurmountable, we will find ourselves sleep walking back to British Rail.

What do passengers make of the news? Here’s a selection of tweets:

But he official figures from Network Rail tell a different story. The moving annual average of public performance measures — the standard measurement for rail franchise performance — suggests that Virgin Trains has been performing worse than other First Group lines. Although they are very different services, the survey suggests most passengers are not unhappy with First:

This week’s fare increases and today’s takeover both highlight a key issue with our rail franchising system. Money continues to be the main motivator for handing out franchises, while quality of service comes second. Margaret Thatcher said that a private rail network would be ‘a privatisation too far’. Since 1994, the numerous safety incidents and huge above-inflation fare rises suggest she may have been right.

Tags: HS2, Privatisation, Railways, Trains, UK politics

David Lindsay

No corporation better encapsulated the seamlessness of the 1960s, the 1980s and the Blair Years than Richard Branson’s Virgin.

The beginning of its end is the beginning of the end of, almost literally, one hell of an era.
Axstane

These tenders must be open and fair and adjudged in the best interests of the public, not in the best interests of Richard Branson.

Obviously, as the defeated tenderer he has to criticise the decision.

He did get the good part of Northern Rock for small money.
David Lindsay

Even the Spectator declaring for renationalisation, which one might add was in the 1997 Labour manifesto.

Bring it on, uniquely without compensation in view of the manner of the railways’
privatisation, as the basis for a national network of public transport free at
the point of use, including the reversal of bus route and rail line closures
going back to the 1950s. Those trains need to be run on electricity, produced
domestically and not least from our vast reserves of coal, rather than on oil,
which has to be imported, and that often from unsavoury and unstable
petrostates in the Gulf and elsewhere.

Only public ownership can deliver this. Public ownership is of course British
ownership, and thus a safeguard of national sovereignty. It is also a safeguard
of the Union in that it creates communities of interest across the several parts of the United Kingdom. Publicly owned concerns often even had, and could have again, the word “British” in their names.

Ed Miliband and Jon Cruddas, over to you. Supported by the Spectator? If not, why not? How could it expect to be counted as anything other than election expenditure by the Conservative Party? And where would that leave ostentatious anti-Leveson noises about the freedom of the press?
David Lindsay

Richard Branson and Rupert Murdoch have both built their empires on
enormous levels of State favouritism, not least from Margaret Thatcher.
That is why they are now behaving like spoilt children. However, as with
Philip Hammond’s remark about G4S, which enjoyed a very special
relationship indeed with the last Conservative Government and which
obviously enjoys the same with this one, an important and positive point
can now be made.

You were the ones who wanted all the blue-collar work contracted out. It
is still being done at public expense, of course. Just no longer by
staff (although they are very often the same people as before) who have
to be paid and treated properly. Central and local government
contracts are one of many examples of how there is not really any such
thing as “the private sector” in the sense that is usually meant. It
exists only because of numerous forms of central and local government
action. It therefore has vast public responsibilities, to which it is
very high time that it was held.

Here in the North East, we can
almost smell the difference between highly unionised people with
national pay bargaining schemes, and not. But that difference did not
used to exist. It ought not to exist. I shall tell you why not. Even
leaving aside the private sector’s obvious dependence on education,
healthcare, housing provision, transport infrastructure and so on, take
out bailouts or the permanent promise of them, take out central and
local government contracts, take out planning deals and other
sweeteners, and take out the guarantee of customer bases by means of
public sector pay and the benefits system, and what is there left? They
are all as dependent on public money as any teacher, nurse or road
sweeper. Everyone is.

And with public money come public
responsibilities, including public accountability for how those
responsibilities are or are not being met, accountability and
responsibilities defined by classical, historic, mainstream Christianity
as the basis of the British State and as the guiding inspiration of all
three of this State’s authentic, indigenous, popular political
traditions.
- Ron Todd
  
  In return we have the state sectors total dependance on the tax from the private sector.
Ron Todd

I use the west coast line two or three times a year. I might have been unlucky but I often had problems booked seats that were double booked or in a carriage that did not exist buffet services with no hot water (not to mention the prices) and once a train from Glasgow to Southampton with no working toilets. So I for one am happy to see somebody else get a chance.
Bill Brinsmead

As a frequent user of Virgin Train’s West Coast Mainline service since 1997 – and of BR services from the mid 1970s – I can only report a good and improving service, as is reported in passenger surveys.
I also recall that back in 1996/97 Richard Branson had to be persuaded to bid for the franchise due to a dearth of bidders and that he in a sense saved the franchise process and then developed the West Coast Mainline services we enjoy today.
A thank you is in order.
In2minds

Richard Branson gets to look more like Gerry Mulligan as the years go by.
Alexsandr

Oh come on. Virgin are just bad losers.
And they were crap when they first got west coast and cross country.
Salisbury

Interesting that the only line performing nearly as badly as Virgin according to the chart is the nationalised East Coast line.

Meanwhile, can’t help thinking this isn’t Branson’s just desserts for all those years he spent brown-nosing new Labour.
- tele_machus
  
  Agree Branson needs this kick up his ring.
  And of course we are all glad New Labour is dead and the alternative to the austerity crazed tories and liberals in 2015 will have the true interests of the British Majority at heart-not just the Mandelson sanitised plutocrats like Branson
frankp1@sky.com

One simple question: who bunged whom – and how?
Publius

“Since 1994, the numerous safety incidents and huge above-inflation fare rises suggest she may have been right.”

Oh, please! I mean… oh, never mind. It isn’t worth engaging with this drivel.
Chris lancashire

So under British Rail we never had “numerous safety incidents and huge above-inflation fare rises”? Well, possibly right on the latter as it was all too easy to just stick a hand in the taxpayer’s pocket. For me, rail nationalisation has proved largely positive with a huge investment in new rolling stock and a generally better attitude towards passengers.
As for Virgin vs First on the WCML let’s see. Virgin have certainly provided latterly a very good overall service and we should be willing to see what First can do. Perhaps Branson has been outbid a fourth time as others are prepared to take less out in dividends than he wants.
MK

Massive own-goal potential again. Coalition risks being known for only breaking the last few bits of the country that worked, whilst ignoring all the obviously broken parts.

I’ll spell it out – few people think the priority is Lords reform, scrapping A-levels or new marriage legislation – even though many may think they are worthy causes.

Most people are quite concerned about banking oversight, our economic prospects, youth unemployment and our relationship with the EU.

First’s risky win highlights fundamental problems with the rail network

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