Virgin challenge delays rail contract

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The government has delayed the signing of a contract to hand control of the West Coast main line to FirstGroup because of a legal challenge by Virgin Group.

Theresa Villiers, transport minister, told MPs the government would “defend robustly” its decision to strip Sir Richard Branson’s company of the rail franchise it has run for the past 15 years.

But she confirmed the request for a judicial review by Virgin had delayed the signing of the new franchise, which is due to start on December 9. FirstGroup had expected to sign the contract last week.

Ms Villiers comments – in the form of a written statement on the first day that MPs returned to parliament following the summer recess – appeared to signal an attempt by the government to defuse the issue following two weeks of uproar over the decision to change operator.

She defended the decision to award the contract to FirstGroup, saying its bid “represents significant improvements for passengers and will provide a good return for the taxpayer”.

Maria Eagle, the shadow transport secretary, said the government’s use of a written statement was “unacceptable” and called on her counterpart, Justine Greening, to come to the House to answer MPs’ questions.

The government decided to strip Virgin of its only rail contract after FirstGroup bid £13bn to run services for the next 15 years, putting it well ahead of Virgin’s £11bn bid.

Sir Richard has mounted a typically vocal campaign against the decision and raised concerns about the rail franchising process in the UK.

He has threatened to withdraw from any future UK rail tenders and attacked FirstGroup’s bid as “undeliverable”.

In a letter to the Financial Times, he defended himself against accusations from FirstGroup and the government of “sour grapes” and said he first raised concerns about the process more than two years ago.

He said FirstGroup’s premium payments depended on the company doubling passenger numbers to 66m over the franchise, which would require highly efficient use of the trains even given the group’s capacity growth plans.

A decision by the court on whether to allow a judicial review is expected in the coming days.

If Virgin is successful in winning a review it is likely to delay FirstGroup’s plans to take over the franchise at the end of the year.

FirstGroup said on Monday night it expected the DfT “to sign the contract soon” and it would continue with “preparations to start the new franchise on December 9 so that we can deliver the many benefits and improvements that we are offering without delay or disruption”.

Virgin Rail could not be reached for comment.

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