by Bradley Gerrard, The Telegraph, April 23, 2018
Pressure is mounting on Virgin Trains after the Government said it was keeping the company’s future in rail under “constant review”.
Sir Richard Branson’s train company stoked political controversy last year when it emerged its joint venture which runs the East Coast mainline with Stagecoach would have to hand the keys to the franchise back years early.
The pair were accused of overbidding for the franchise by Chris Grayling, the Transport Secretary, while the companies blamed macroeconomic factors and uncompleted Network Rail upgrades for preventing the joint venture from hitting its targets.
The companies have also reiterated that they have met the financial obligations of the contract, including using all of a £165m parent company bond, put in place at the start of the franchise to ensure the Government receives its payments if a rail operator is struggling.
But transport minister Jo Johnson has responded to a written question from Andy McDonald, the shadow transport secretary, stating his department is “keeping Virgin’s eligibility for current and future bids under close scrutiny and constant review”.
The comments come just a couple of months after Mr Grayling extended Virgin Trains’ contract on the West Coast mainline through to 2019.
The Secretary of State defended the decision by stating Virgin was the majority shareholder on the West Coast line, unlike the East Coast which is 90pc controlled by Stagecoach.
Any rebuke of Virgin Trains by the Government seems unlikely to involve removing its ability to bid for future rail franchises though.
Mr Grayling has said there are “no adequate legal grounds” to restrict either company from bidding for future rail contracts.
Mr McDonald said: “Labour believes franchise failure must mean forfeit so it is good that the Government is reviewing the company’s right to bid for rail franchises. There must be no reward for failure.”
Virgin Trains declined to comment.