Lawyers for Virgin Trains were yesterday preparing to launch a last-minute legal challenge to stop the Government signing a contract which will strip them of their right to run the West Coast Mainline service.
The company said it had a team of lawyers working over the Bank Holiday examining their options for a judicial review of the decision to hand over the West Coast franchise to FirstGroup. A final decision will be made today but a spokesman for the company said a challenge was "likely" unless the Government backed down and allowed Parliament to scrutinise the deal.
"You don't pay expensive lawyers to work over the Bank Holiday weekend unless your intentions are pretty clear," said a spokesman for the group. The move came as Labour urged the Transport Secretary Justine Greening not to sign off the contract, which could happen any time from midnight tonight, until MPs have been able to scrutinise it in detail. In a letter to Ms Greening, the shadow Transport Secretary Maria Eagle wrote: "The decision appears almost exclusively a 'bottom line' one, driven by a particularly high pledge of payments to Government."
She added: "You will know of the history of franchise contracts being brought to an early end, at least in part because of over-ambitious payment promises that proved impossible to realise. There are fears that lessons have not been learnt."
Ms Eagle also warned about the impact on fares and levels and quality of services and the possibility of First cutting short the contract.
FirstGroup claims it will deliver better value for taxpayers. It plans major improvements to the InterCity West Coast franchise to enhance the customer experience, including improved Wi-Fi and catering, as well as additional services and more seats and reducing standard anytime fares by 15 per cent on average.
But Virgin claims FirstGroup's payments to Government to run the franchise are skewed towards the end of the contract period – leaving open the possibility that it could pull out early and substantially reduce the worth of the deal to the taxpayer.
In an interview on the BBC, Richard Branson who runs Virgin Trains alongside the transport company Stagecoach claimed that FirstGroup's bid will lead to "almost certain bankruptcy". "I think that the person who can really intervene to try to get some sense into the Department for Transport is the Prime Minister and he is on holiday, the Chancellor is on holiday and we would like things delayed by a month or so," he said. "If, as a result of that, it means that the handover is delayed we would obviously be very happy to run it on a not-for-profit basis."
The Department for Transport dismissed Sir Richard's offer to run the service on a not-for-profit basis to allow the deal to be re-examined, insisting it would go ahead with the contract. A spokesman said: "However, the winning bidder was decided by a fair and established process and no reason has been advanced to convince DfT not to sign the agreement."
He added: "We are in receipt of a letter from Virgin Trains which is a precursor to legal action. We are reviewing the correspondence. The Department is confident in the process it undertook and the decision made in awarding the West Coast franchise."
FirstGroup insisted the bidding process was fair and deliverable. Chief executive Tim O'Toole said: "We won the bid fair and square."