West Coast Mainline fallout
Virtually nobody I know gave Virgin much hope with their judicial review on the west coast mainline franchise, we could understand why they were doing it but it is well known that judges do not like overturning government decisions unless it is blindingly obvious that the government did not follow the law. There was a commonly held view that Branson was being a sore loser, even amongst those that thought the figures didn’t hold up. So the announcement very late on the 2nd was a big shock, Virgin had effectively won without even needing to go to court, the DFT had effectively said he was correct and people were eating humble pie in large quantities.
Worst to come out of this is the DFT themselves they have been shown as simply not being up to the job. The brush of course will tar more than just the west coast bid, there is HS2, IEP and all franchise decisions ever made by the DFT, if this is fair or not it doesn’t matter.
Then of course there is First group, it doesn’t matter if their bid was actually deliverable or not, it now has such a big question mark on it that the majority of people will consider that it probably wasn’t. The stock market has chopped 20% off their value and rather than having the west coast to save their bacon in the short term they have to knuckle down and sort their existing problems out. And First do have problems, their rail division isn’t particularly profitable and a lack of investment has caused some major problems in their bus division. While Stagecoach, and Go-ahead have been driving forward their bus divisions, growing them by increasing passengers and increasing quality, First have been too busy watching costs. It seems that First know the cost of everything and the value of nothing, and wherever they have competition they lose out.
And finally we have Virgin, who do a reasonable job at delivering service on what is probably the hardest line in the network to do it. They won the two hardest franchises when the government originally privatised the railways and transformed both of them. When it comes to the vision thing Virgin and Chiltern are top of the railway pile, almost everyone else is just running a franchise. They have escaped oblivion by the skin of their teeth and should have a good chance when the franchise is finally rerun.
So how did all this lot come to be? I suspect we have to go back to Hatfield. Virgin had two franchise contracts with the office of passenger rail franchising and two contracts with RailTrack to upgrade the track. With the ensuing chaos RailTrack was effectively nationalised, Virgin lost cross country and renegotiated west coast, and their two contracts with RailTrack were effectively null and void. Most people agree that Virgin got quite a good deal on their renegotiation since the government were in a bit of corner by also holding the RailTrack contract too. This and Branson’s general style also seems to have breed bad blood within the DFT. Virgin did bid for cross country and lost to Arriva, they also bid twice for the east coast mainline and lost twice. Cross country is now even more overcrowded than when Virgin ran it, and Arriva is in revenue support. Both the winners of the east coast went broke, and the line is now run directly by the government. So when Virgin lost their last franchise to what they considered a similarly flawed bid, what did they have to lose? Well technically Stagecoach had something to lose since they own 49% of Virgin Trains, but it seems that Brian Souter founder and CEO may have given his approval while staying silent himself, since Virgin own 51% of the company anything they do isn’t Stagecoach’s fault.
So we have a department who have serially failed to get a good deal, they may not have been incompetent like on the west coast but it is hard not to look back and see a theme going on here. In the short term something will have to be done about the west coast franchise, after cack handedly using the threat of Directly Operated Railways to try and rub Virgins nose in it during the legal delay it seems hard to imagine the government will dare to take the fallout of running it themselves unless legally they have no other choice. So it looks as if Virgin will keep running it for another year or so and probably on a non-profit basis will any profits going to charity (because Branson can’t afford the bad publicity of going back on his promise). Other franchises will probably be extended in a similar way. The government will also most likely want to get the hot potato of franchises off them, the stewardship of this inside the DFT has been a complete failure, so expect something of the form of the office of rail passenger franchising to reappear soon!
Worst to come out of this is the DFT themselves they have been shown as simply not being up to the job. The brush of course will tar more than just the west coast bid, there is HS2, IEP and all franchise decisions ever made by the DFT, if this is fair or not it doesn’t matter.
Then of course there is First group, it doesn’t matter if their bid was actually deliverable or not, it now has such a big question mark on it that the majority of people will consider that it probably wasn’t. The stock market has chopped 20% off their value and rather than having the west coast to save their bacon in the short term they have to knuckle down and sort their existing problems out. And First do have problems, their rail division isn’t particularly profitable and a lack of investment has caused some major problems in their bus division. While Stagecoach, and Go-ahead have been driving forward their bus divisions, growing them by increasing passengers and increasing quality, First have been too busy watching costs. It seems that First know the cost of everything and the value of nothing, and wherever they have competition they lose out.
And finally we have Virgin, who do a reasonable job at delivering service on what is probably the hardest line in the network to do it. They won the two hardest franchises when the government originally privatised the railways and transformed both of them. When it comes to the vision thing Virgin and Chiltern are top of the railway pile, almost everyone else is just running a franchise. They have escaped oblivion by the skin of their teeth and should have a good chance when the franchise is finally rerun.
So how did all this lot come to be? I suspect we have to go back to Hatfield. Virgin had two franchise contracts with the office of passenger rail franchising and two contracts with RailTrack to upgrade the track. With the ensuing chaos RailTrack was effectively nationalised, Virgin lost cross country and renegotiated west coast, and their two contracts with RailTrack were effectively null and void. Most people agree that Virgin got quite a good deal on their renegotiation since the government were in a bit of corner by also holding the RailTrack contract too. This and Branson’s general style also seems to have breed bad blood within the DFT. Virgin did bid for cross country and lost to Arriva, they also bid twice for the east coast mainline and lost twice. Cross country is now even more overcrowded than when Virgin ran it, and Arriva is in revenue support. Both the winners of the east coast went broke, and the line is now run directly by the government. So when Virgin lost their last franchise to what they considered a similarly flawed bid, what did they have to lose? Well technically Stagecoach had something to lose since they own 49% of Virgin Trains, but it seems that Brian Souter founder and CEO may have given his approval while staying silent himself, since Virgin own 51% of the company anything they do isn’t Stagecoach’s fault.
So we have a department who have serially failed to get a good deal, they may not have been incompetent like on the west coast but it is hard not to look back and see a theme going on here. In the short term something will have to be done about the west coast franchise, after cack handedly using the threat of Directly Operated Railways to try and rub Virgins nose in it during the legal delay it seems hard to imagine the government will dare to take the fallout of running it themselves unless legally they have no other choice. So it looks as if Virgin will keep running it for another year or so and probably on a non-profit basis will any profits going to charity (because Branson can’t afford the bad publicity of going back on his promise). Other franchises will probably be extended in a similar way. The government will also most likely want to get the hot potato of franchises off them, the stewardship of this inside the DFT has been a complete failure, so expect something of the form of the office of rail passenger franchising to reappear soon!