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Talking point – Has the government gone off the rails?

on Wednesday, 05 September 2012. Posted in Interviews

Since Virgin Trains lost out to First Group for the West Coast Main Line railway franchise, there has been a public and political outcry. But is this sufficient grounds for a government U-turn?

Talking point – Has the government gone off the rails?

It’s not often that a government procurement decision attracts so much attention. But the decision on August 15 to award the West Coast Main Line railway franchise to First instead of present incumbent Virgin Trains has certainly provoked some strong feelings: an e-petition started on the Government website had amassed more than 165,000 signatures at press time. That’s enough to trigger a debate in the House of Commons. Naturally, the loudest dissenting voice has been that of Virgin boss Richard Branson; he wants a judicial review of a decision that will strip him of a franchise it has run – arguably rather successfully – for the last 15 years.

The debate is fierce. On one hand, you could argue that a full procurement process has been followed – and First’s bid offered a much bigger financial upside for the taxpayer. On the other, those 165,000 signatures show the depth of support for Virgin among its customers –and First’s unsuccessful stewardship of the Great Western franchise raises genuine doubts about its ability to deliver on its promises.

Branson’s disgruntlement is understandable; after a difficult start, Virgin Trains went on to become one of the most successful and profitable of the UK’s 19 rail franchises. But is he right to contest the decision so vigourously?

 

YES

says Ross McKillop, freelance IT and VoIP consultant, and the man behind the petition

The way the decision has been made doesn’t really make sense. The process is fundamentally flawed. The weighting of First’s bid is a bit odd; for the first 10 years, Virgin is actually delivering more money to the Government. And then in the last three years, First reckons it’s going to find about £2bn. We also need to take into account the fact that First are handing back the keys to the Great Western franchise three years early to avoid a payment of about £860m. If they were really committed to improving our railways, surely they wouldn’t be doing that.

The wording in the petition isn’t calling for the reinstatement of Virgin; it’s just asking for the decision to be reviewed. An independent organisation needs to look at this and check it really is the right decision for the country and for taxpayers. Because on the face of it, I’m not sure it is.

 

NO

says Jamie Waller, founder and CEO of debt management & enforcement group, JBW

The reality is that every day, people lose contracts where they’ve invested a lot of time, money and effort. Also, people lose contracts to their competitors where they believe they’ve been doing a rather good job until this point. Everyone has to lose from time to time. But what Richard Branson is trying to do now is create this almost union-like environment where he’s bullying the DfT into making a decision based on the customer. Yet, unfortunately, it’s not the customer making the purchase. 

Branson is throwing his toys out of the pram. I think it’s terribly bad behaviour. He is a leading business figure that people look up to, so he should be behaving a bit more responsibly, rather than calling the people to arms. Has Richard Branson got 165,000 signatures on a petition because of Virgin Trains? Has he hell. He’s got 165,000 signatures on a petition because he’s Richard Branson.

 

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