Virgin Trains to mount last-ditch legal challenge over West Coast main line

Transport secretary Justine Greening claimed that if Virgin had won the bid it would have "been perfectly happy with the process" (Getty Images)

Virgin Trains is to mount a last-ditch legal challenge to try to hold on to its lucrative West Coast main line franchise.

The moves follows the Government’s announced that Virgin and its partner Stagecoach had lost out to FirstGroup in the bidding war to run a new 13-year contract from December.

After failing to persuade the Transport Secretary Justine Greening to delay signing the contract until it can be scrutinised by Parliament Virgin said it would launch a legal bid to overturn the decision entirely.

However legal experts expressed scepticism that the move to judicially review the Government’s decision could do anything other than delay the signing.

Announcing the challenge Sir Richard Branson said they had “not taken the decision lightly” but said it was “the only course now available to try to unravel this sorry process”.

“We had hoped that Parliament or an external review would be able to scrutinise this badly flawed process before the franchise was signed.

“However that opportunity would be denied if the DfT follows through with its determination to rush through the process before Parliament returns next week.

“(We) wanted a debate before the decision was taken not a postmortem afterwards.”

In a statement, Virgin said today: “Virgin Trains Limited (VTL) has today commenced court proceedings in respect of the decision to award the West Coast Main Line franchise to FirstGroup.

“We have tried for three weeks to get clarity over the DfT's decision and to have a number of key questions answered. On each occasion we have been refused information.

“We are left with no choice but to commence court proceedings as we believe the procurement process has ignored the substantial risks to taxpayers and customers of delivering FirstGroup's bid over the course of the franchise.”

Virgin went on: ”In addition it (the process) has ignored the DfT's own assessment that VTL's bid was more deliverable and a lower risk. We question whether FirstGroup's bid has been correctly risk adjusted by the department given all of its supposed incremental value is delivered after 2022.

“The current process is geared to selecting the highest risk bid and needs to be independently audited to prevent a repeat of former franchise failures.”

Responding to news of the legal challenge, FirstGroup said it had “every confidence in the DfT's process” which it described as “rigorous, detailed and fair”

“There has been no complaint about the process, which was carefully described in advance, until Virgin Rail Group had lost commercially,” it said.

The new West Coast franchise will last for 13 years and four months, with an option to extend to a total of 15 years.

The FirstGroup bid is worth £5.5 billion at net present value, with Virgin believed to have bid £4.8 billion. FirstGroup's annual premiums will grow steadily over the course of its franchise.

Sir Richard fears that FirstGroup will run into financial difficulties in the same way that two former operators of the East Coast main line - GNER and National Express - did.