Bloomberg News

Branson Seeks Speedy U.K. Government Rail-Policy Review

October 26, 2012

The U.K. government must “hurry up” with reviewing its railway-franchising program to ensure Britain’s West Coast main line secures adequate investment in trains and stations, billionaire Richard Branson said.

“They ought to get people to work day and night to get a new system in place which is infallible, transparent and open,” Branson said in an interview today on a flight to Mumbai from New Delhi. “It shouldn’t have to take three years. It could be done in 18 months.”

Branson’s Virgin Trains venture is allowed to retain the West Coast route network for nine to 13 months as bids are sought for an interim franchise deal to manage the rail line until a new full-term contract can start, the Department for Transport said Oct. 15. Assignment of the West Coast line was halted on Oct. 3 following the discovery of what the government said were “serious flaws” regarding the choice of FirstGroup Plc’s (FGP) 5.5 billion-pound ($8.9 billion) bid.

The rail network is Britain’s busiest, carrying 31 million people a year on routes linking London with cities including Birmingham, England, and Glasgow. The temporary arrangements will delay spending on improvements to West Coast assets until a long-term operator is chosen, Branson said.

“The interim arrangement won’t enable us to get out there and invest,” he said. Terms under which Virgin Trains will continue to run the route were still being negotiated, he said. The train operator is a joint venture between Branson’s Virgin Group and Perth, Scotland-based Stagecoach Group Plc. (SGC)

The DfT is awaiting results of an inquiry into franchising by Eurostar Group Ltd. Chairman Richard Brown, scheduled to be completed in December, before deciding on a bid timetable. A second study overseen by Sam Laidlaw, chief executive officer of energy supplier Centrica Plc (CNA), and Ed Smith, formerly of accounting firm PricewaterhouseCoopers LLP, will examine the West Coast award and is due to be published by the end of this month.

To contact the reporters on this story: Kari Lundgren in Mumbai via klundgren2@bloomberg.net; Tom Metcalf in London at tmetcalf7@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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