Branson promises big savings in East Coast rail franchise bid

Sir Richard Branson pledged yesterday to deliver "substantial savings" for the taxpayer if Virgin Trains wins the contest to take over the East Coast mainline, one of the country's premier rail routes.

Speaking as bids were formally submitted for the franchise, which is held by Great North Eastern Railways (GNER), a subsidiary of Sea Containers, Sir Richard said that Virgin would recreate the old intercity network between London and Scotland if its bid succeeds. Virgin is bidding in partnership with Stagecoach through a joint venture called InterCity Railways.

Virgin already operates the West Coast mainline to Scotland and Cross Country Trains and Sir Richard said there would be big cost savings to be made by combining those with the East Coast route from London to Edinburgh.

The route is used by 15 million passengers a year and generates income of about £400m. GNER pays a premium of £30m a year to the Government for the right to operate the franchise and makes an annual profit of £30m to £40m.

However, when the new franchise is awarded the premium payment will rise sharply and track access charges paid to Network Rail for enhancement work to the line will also rise.

Sir Richard said: "In the current climate of belt tightening one of the Government's key criteria is who can deliver the most cost efficient railway."

Apart from Virgin and GNER there are two other bidders for the East Coast route - First Group and a partnership between Danish State Railways and the freight operator DWS.

The Strategic Rail Authority (SRA) aims to award a new 10-year franchise by the end of February with the successful bidder taking over from May.

The Virgin bid is likely to be referred to the Competition Commission for a three-month inquiry because of the monopoly it would give the company over rail services to Scotland.

However, Sir Richard said he did not believe there were any genuine competition concerns because rail accounted for only 6 per cent of the entire market and the real rivalry was with the car and airlines.

He said that if Virgin was successful the East Coast route would be the last franchise it bid for. There had been speculation that it would tender for the Great Western route, which operates from Paddington to the West Country, when it comes up for renewal in two years' time.

The rival bidders would make no comment on the contents of their bids or any potential benefits to customers. Industry insiders claimed that the SRA had requested in writing that no external discussion of bids take place.

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral