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Last updated: August 27, 2012 9:46 am
The opposition Labour party has urged Justine Greening, transport secretary, not to sign off the contract to run the West Coast rail line until MPs have been able to scrutinise it in detail.
Ministers have rebuffed an offer by Sir Richard Branson to run the West Coast franchise without making a profit if it gives the government time to review its decision to hand the franchise to FirstGroup, the rival train company.
But Labour says MPs have been denied the chance to raise concerns about the deal because it was announced during the Commons summer recess.
In a letter to the transport secretary, Maria Eagle, shadow transport secretary, noted that FirstGroup’s successful bid “was significantly higher” than any other bid and warned of the history of franchise contracts being brought to an early end, partly because of “over-ambitious payment promises”.
Warning about the impact on fares and levels and quality of services, Ms Eagle said: “Due to the wide-ranging nature of these concerns, I would therefore urge you to delay any signing of this contract until after you have made the statement to parliament – a statement I’m sure you will agree is appropriate for such an important and contentious decision.”
Speaking on the BBC’s Today programme on Monday, Mr Branson, chairman of the Virgin Group, which currently runs the line in conjunction with Stagecoach, urged the prime minister to intervene in the row “to try to get some sense into the Department for Transport”.
Writing in the Sunday Telegraph the previous day, he said: “There should be an independent audit of the Department for Transport decision to ensure it has been based on correct criteria and reliable forecasting of customer numbers, revenue and payments to government.
“If this process means extending the current franchise beyond December for a few months, I and my partners at Stagecoach would happily run the extended franchise on a not-for-profit basis, or donate profits to charity.”
But the transport department soon rejected Sir Richard’s offer. A spokesman said: “The winning bidder was decided by a fair and established process and no reason has been advanced to convince the department not to sign the agreement.”
Sir Richard’s comments also triggered an angry response from FirstGroup, saying it showed that his company could have bid to operate the line more cheaply. “The fact that he can make this offer shows how large his profit margins will be and what a mistake he made when bidding and not giving a fair deal to the British taxpayer.”
A person close to the company added that Sir Richard’s latest move “smacked of desperation”.
FirstGroup has been on the back foot for most of the week after the government decision was announced, with more than 100,000 people signing a petition urging the government to reconsider its decision.
By Sunday evening, the petition, which has been published on the Number 10 website, had attracted more than 127,000 signatures – 27,000 more than is needed to prompt a committee of backbench MPs to consider it for a Commons debate.
Sir Richard has meanwhile criticised FirstGroup, saying it promised “undeliverable passenger numbers”. A trading update from Stagecoach last week showed the operation had grown its revenues 0.6 per cent since April. FirstGroup has promised growth of 10.4 per cent a year.
But a spokesman for FirstGroup dismissed the possibility that the contract could be delayed. He said: “We still expect the process to be observed and expect to sign the contract this week and look forward to running the West Coast train line.”
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