First will not take over West Coast from December

[A0]

If I was Tim O'Toole I'd probably say that I was considering all the options and imply that I had the lawyers champing at the bit, but I'm not sure what I'd say if someone asked me what the lawyers might be going to do. The process to relet the West Coast franchise has failed. First might try to sue the DfT for the loss of profits that they might have made if the DfT hadn't decided to abandon the process. But they could do that regardless of who actually runs the route from December 9. Somebody has to run it. Some people favour Virgin, others favour DOR. I don't see what legal action could be triggered if DfT comes to an arrangement with Virgin, which First couldn't have started otherwise.

Unless, perhaps, they argue that the process by which the DfT came to such an arrangement was flawed, etc.

It'll be interesting to see how far First get with any legal action they're considering. The contract hadn't been signed (although the outcome had been announced) so there isn't a breach of contract. The SoS has stated that costs incurred from submitting a bid will be refunded - so technically First will be back in the position they were before the bid process commenced, which means First will have to demonstrate some loss arising from the SoS's decision to cancel the contract - which could be interesting.
--- old post above --- --- new post below ---

Isn't the livery after December 9th relevant to the thread? I'd be afraid to start a separate thread about that because people would tell me not to do two threads on the same topic.

It's relevant - but unimportant in the greater scheme of things. There are much more important questions out there at present.

As we all know, rolling out a new livery over a fleet usually takes many months, so any new liveries unveiled on 9th Dec (or thereabouts) would only be one or two sets.

I'm not sure it would be prompting any conversation if Virgin had won, but stated they were unveiling a new livery.

 

[LNW-GW Joint]

Isn't the livery after December 9th relevant to the thread? I'd be afraid to start a separate thread about that because people would tell me not to do two threads on the same topic.

I think it's because liveries are a lot less important than the business/political issues here.

Reminds me of the time in the 90s when Southern Pacific bought out Santa Fe (ATSF) and started repainting the locos with an "SPSF" logo ready for the operational merger.
But the competition authorities refused to allow the merger, so the logos had to be changed back.
The wags said SPSF really stood for "Shouldn't Paint So Fast".
Since then SP was bought out by Union Pacific and ATSF has merged with Burlington Northern (with lots of debate about liveries!).

 

[WillPS]

Isn't the livery after December 9th relevant to the thread? I'd be afraid to start a separate thread about that because people would tell me not to do two threads on the same topic.

I think it's the froth about Swallow that was objectionable.

 

[caliwag]

Telegraph on the pulse...

http://www.telegraph.co.uk/finance/...ent-backed-operator-runs-West-Coast-line.html

 

[snail]

Some good points in the article, without trying to spin it one way or the other. Objective reporting for a change.

DOR are doing ok on the East Coast but do they have the people to take on WC? Did they pick anyone up from GNER? Could we end up with DOR and all the same faces running the show?

 

[eastdyke]

Can be seen on BBC iplayer 'restart current programme' for next 20 mins.

Not sure whether on iplayer later in evening.

Fairly expected and rather brief, ends with SRB having an 'is that it' look!

The BBC iplayer link is:
http://www.bbc.co.uk/iplayer/episode/b01nb8xd/The_One_Show_08_10_2012/

Thr SRB slot is very early in the show and runs for just over 4 mins.

 

[LNW-GW Joint]

Robert Peston is now on the case: http://www.bbc.co.uk/news/uk-19880903
Looks like the other recent ITTs (ET, GW) are faulty too.

 

[Xenophon PCDGS]

As taxpayers, we are most certainly to hope that those employed in the higher level of the DfT are fully competent in matters of economic planning in their department as their decisions have vast forward financial implications.

That being said, the comment in the Robert Peston story that "flawed assumptions in the DfT model concerning both inflation and that of passenger numbers" reveals a duality of incompetence at the highest managerial level.

 

[The Ham]

I think that DOR should be able to run the WC as most of the staff, including many of the managers, at Virgin would have be running the trains and stations had First won.
That kind of just leaves head office staff and the top level managers, given that DOR have staff that do that over at EC then with a little bit of support it should be possible for them to at least run WC & EC until such time that they can employ extra staff to take up the extra work load (maybe using some of the same head office staff from VT who now are out of work). Then repeat the process every time another franchise comes to the end. As they run more and more franchises the number of head office staff does not need to increase as fast (i.e. 1.75 times for two franchises, 2.40 times for three, 2.95 times for four, etc.).
Then a commercially separate subsidy of DOR could bid run any franchises that come up for tender so that we could really see how well private companies would run the trains compared to the government.
Whether that happens though is a totally another matter though!

 

[HH]

It'll be interesting to see how far First get with any legal action they're considering. The contract hadn't been signed (although the outcome had been announced) so there isn't a breach of contract. The SoS has stated that costs incurred from submitting a bid will be refunded - so technically First will be back in the position they were before the bid process commenced, which means First will have to demonstrate some loss arising from the SoS's decision to cancel the contract - which could be interesting.

Obviously it's First's shareholders who lost out big time, rather than First itself; however there are secondary effects on First. As far as the contractual side is concerned, although there is no provision within the ITT related to the cancellation of the process, it could be argued that there is an implied duty of care to firms who are spending several million pounds on the process. Contracts do not have to be in writing for the court to rule that they exist. What has happened on ICWC is unprecedented, and that always opens up grounds for a claim.

DfT, having refunded all costs, would certainly make a robust defence, but it's not an open and shut certainty that it would win. Still First are in a different situation from VRG - they're not threatened with rail annihilation at this point. It seems quite possible that this is just sabre rattling by O'Toole, as much for the benefit of the markets as it is to gain something from DfT.

 

[jopsuk]

Indications are that nothing will be announced until after the conservative party conference so as not to take headlines away from that. Politics. Lovely.

 

[West Ruislip]

http://railpicturelibrary.zenfolio....-on-west-coast-franchise-to-be-made-on-monday

An announcement regarding the next operator of the West Coast franchise will be made to Parliament next Monday.

Transport secretary Patrick McLoughlin told delegates at the Conservative Party conference that the full franchise may not be relet for 18 months.

If Directly Operated Railways, who currently operate the East Coast franchise, take over operation of the West Coast Virgin Trains has said that it will have to be disbanded , making it difficult for them to make future bids.

In reality there are only two options open to the government. One is to commence a new contract with Virgin Trains, probably on a fixed fee basis, or for Directly Operated Railways to take over.

The government's decision to scrap the West Coast franchise competition will severely impact on other franchises and means the DfT is now faced with not only extending the present c2c, First Capital Connect and First Great Western franchises but has to decide whether it is still a realistic option to return the East Coast franchise to the private sector from December, 2013.

Kate Mingay, one of three civil servants suspended over the decision to scrap the franchise competition, has hit back hard at the DfT saying: "While it has been widely reported in the context of the award of the franchise for the West Coast Main Line that I have been suspended , my role has been inaccurately portrayed , mainly due to to statements and other comment made by the Department for Transport itself. I would like to make it clear that I did not have lead responsibility for the economic modelling for this project. Neither I nor any member of my team had any responsibility for the economic modelling for this project or for any other Department for Transport project. Nor did I have responsibility for the financial modelling in respect of this project."

 

[eastdyke]

Indications are that nothing will be announced until after the conservative party conference so as not to take headlines away from that. Politics. Lovely.

Yes, from RAILNEWS:

Transport secretary Patrick McLoughlin said a decision about who will run West Coast from December will be announced to Parliament on Monday

Full article here:
http://www.railnews.co.uk/news/2012/10/09-franchises-face-long-delays-mcloughlin.html

 

[AndyLandy]

If they're going to get DOR in to run the WCML, I hope they'll also be getting them in to run the GWML and Essex Thameside franchises during this process, too.

I'm sure it would suit FirstGroup down to the ground if Virgin Trains ceased to exist as an entity. Makes it much more likely they'd win the WCML franchise.

 

[pablo]

Not at all. Legally you can't take a contract off one party and give it to another without a breach, et seq. DafT need to dance around this one. Although the contract with First wasn't signed, the intention was there, and the lawyers will have a fine time over that one.

 

[Holly]

... Then a commercially separate subsidy of DOR could bid run any franchises that come up for tender so that we could really see how well private companies would run the trains compared to the government.
Whether that happens though is a totally another matter though!

Backdoor renationalisation.

Probably the best solution.
Sufficiently face-saving and politically popular too, backdoor renationalisations might get the Condems reelected.

 

[tbtc]

If Directly Operated Railways, who currently operate the East Coast franchise, take over operation of the West Coast Virgin Trains has said that it will have to be disbanded , making it difficult for them to make future bids

I'm not sure why Virgin Trains would have to be disbanded and unable to make future bids, surely this is Branson sounding a little disengenuous?

 

[Pumbaa]

ITV now reporting DOR being mobilised, possibly for long term running of WC:

http://www.itv.com/news/2012-10-09/will-virgin-really-get-to-carry-on/

 

[AndyLandy]

I'm not sure why Virgin Trains would have to be disbanded and unable to make future bids, surely this is Branson sounding a little disengenuous?

It certainly sounds plausible. I could believe it's possible that there's a tier of top level management that would have nothing to do for the duration if VT ceases to hold a franchise. What that actually means in real-world terms is another matter. Could Virgin Group support them during the gap? Or close down the operation and re-start it in 18 months time?

On the other hand, it's worth bearing in mind that (as far as I know), Virgin don't have any other comparable operations that this level of management could be involved in. The other bidders have other rail services around the world that they're running. It is possible that this gap would be more disruptive to Virgin than it would to any other prospective franchisee.

 

[tbtc]

It certainly sounds plausible. I could believe it's possible that there's a tier of top level management that would have nothing to do for the duration if VT ceases to hold a franchise. What that actually means in real-world terms is another matter. Could Virgin Group support them during the gap? Or close down the operation and re-start it in 18 months time?

On the other hand, it's worth bearing in mind that (as far as I know), Virgin don't have any other comparable operations that this level of management could be involved in. The other bidders have other rail services around the world that they're running. It is possible that this gap would be more disruptive to Virgin than it would to any other prospective franchisee.

That sounds a more sensible way of looking at it (although I suppose they could work for Stagecoach?).

If they'd said "if we lose the WCML franchise then it'd be uneconomic to continue to employ all these top staff, so we might as well disband" then I'd accept that - the way it was presented sounded different (hence my questioning).

 

[WillPS]

Backdoor renationalisation.

Probably the best solution.
Sufficiently face-saving and politically popular too, backdoor renationalisations might get the Condems reelected.

Agreed but would need the Railways Act 1993 to be reformed, as it specifically prohibits this from happening. But then I guess, since the franchising system it prescribes is under attach anyway, that's entirely feasible at this moment in time.

I'm not sure why Virgin Trains would have to be disbanded and unable to make future bids, surely this is Branson sounding a little disengenuous?

It certainly sounds plausible. I could believe it's possible that there's a tier of top level management that would have nothing to do for the duration if VT ceases to hold a franchise. What that actually means in real-world terms is another matter. Could Virgin Group support them during the gap? Or close down the operation and re-start it in 18 months time?

On the other hand, it's worth bearing in mind that (as far as I know), Virgin don't have any other comparable operations that this level of management could be involved in. The other bidders have other rail services around the world that they're running. It is possible that this gap would be more disruptive to Virgin than it would to any other prospective franchisee.

I felt it was a bit off too - Virgin bid for and won Cross Country and West Coast in the 90s without any existing presence; and there's a precedent for two groups placing joint bids with no existing co-presence (TransPennine Express) if he's referring to the Virgin Trains partnership.

That sounds a more sensible way of looking at it (although I suppose they could work for Stagecoach?).

If they'd said "if we lose the WCML franchise then it'd be uneconomic to continue to employ all these top staff, so we might as well disband" then I'd accept that - the way it was presented sounded different (hence my questioning).

Would Stagecoach look to form another partnership with Virgin? The rumbles all seem to be that Stagecoach would prefer to go it alone on EC etc.

 

[Oswyntail]

I'm not sure why Virgin Trains would have to be disbanded and unable to make future bids, surely this is Branson sounding a little disengenuous?

The sort of emotional blackmail a 6-year old would use. Response? Yup, it's a hard world in business - get over it!

 

[ainsworth74]

If they're going to get DOR in to run the WCML, I hope they'll also be getting them in to run the GWML and Essex Thameside franchises during this process, too.

In the case of GW I'm not sure that it's particularly likely. Firstly the DfT have some breathing room on that as the franchise is now due to expire on the 20 July 2013 and secondly First haven't had an extension (indeed they turned one down). Now it's possible that First would be willing to negotiate an extension on slightly better terms than the original (taking account of the economic situation and delayed upgrades). So on the GW I actually think we might just see a 6-12 month extension of FGW. On ET I think it might be a bit more complex as c2c have already had one extension (to allow for the franchising process to be reviewed ) so I'm not sure it would be possible for them to get another. But again the DfT do have breathing room to make their decsion (26 May 2013 is the end point).

 

[tbtc]

I felt it was a bit off too - Virgin bid for and won Cross Country and West Coast in the 90s without any existing presence; and there's a precedent for two groups placing joint bids with no existing co-presence (TransPennine Express) if he's referring to the Virgin Trains partnership

True - and there are other new entrants to the franchise process - the Spanish seem to have put a bid team together without actually running any TOCs for example.

You have to speculate to accumulate, as I'm sure Branson knows.

Would Stagecoach look to form another partnership with Virgin? The rumbles all seem to be that Stagecoach would prefer to go it alone on EC etc

Stagecoach are keeping very quiet - and rightly so

The sort of emotional blackmail a 6-year old would use. Response? Yup, it's a hard world in business - get over it!

When you put it like that... yeah, sounds about right

 

[jon0844]

I'm not sure why Virgin Trains would have to be disbanded and unable to make future bids, surely this is Branson sounding a little disengenuous?

I expect most of the two gazillion people that signed the petition and went mad on Facebook have got bored now, so Richard needs to keep the momentum going. That's probably why he's doing the TV/radio circuit and saying things to get people worried that it might kill Virgin Trains FOREVER (as if they wouldn't put in a bid for ECML!).

Why not let people even think it could harm Virgin as a whole. No more Virgin Media. No more Virgin Atlantic - Damn this Government that has it in for Virgin!

One newspaper has already claimed the DfT was sending emails around saying 'anyone but Branson' even though there's been no actual evidence of this. More stirring by Virgin perhaps?

 

[LNW-GW Joint]

So there are 2 TOC management teams in limbo (VT and the First West Coast team who were poised to take over), plus 3 bid teams (Essex Thameside, Great Western and Thameslink).
That affects virtually all the owning groups (Virgin, First, Stagecoach, NX, Arriva, Abellio, MTR and Govia, plus Keolis/SNCF), and also their partners (consultants, banks, ROSCOs, train builders etc).
That leaves only Serco, I think, as the only owner not impacted by the franchise standstill.
What a monumental waste of senior rail expertise.

I suppose consultation and planning for other franchises can make some progress (eg the future TP/Northern and Scotrail), but with the overall franchising timetable up in the air it won't be long before they are affected too.
At least Network Rail can get on with the day job and its electrification plans.

 

[jon0844]

ITV now reporting DOR being mobilised, possibly for long term running of WC:

http://www.itv.com/news/2012-10-09/will-virgin-really-get-to-carry-on/

As Virgin Trains and First Great Western continue to race for the contract

The media really don't fully understand how the railway works do they?

 

[tbtc]

Damn this Government that has it in for Virgin!

Yup, it's a witch hunt (even the bit where the current Government gave Virgin the lucrative bits of Northern Rock at a "fire sale" price)

 

[sprinterguy]

In the case of GW I'm not sure that it's particularly likely. Firstly the DfT have some breathing room on that as the franchise is now due to expire on the 20 July 2013 and secondly First haven't had an extension (indeed they turned one down). Now it's possible that First would be willing to negotiate an extension on slightly better terms than the original (taking account of the economic situation and delayed upgrades). So on the GW I actually think we might just see a 6-12 month extension of FGW. On ET I think it might be a bit more complex as c2c have already had one extension (to allow for the franchising process to be reviewed ) so I'm not sure it would be possible for them to get another. But again the DfT do have breathing room to make their decsion (26 May 2013 is the end point).

If the DfT review of its’ processes is not complete until the end of the year, as is expected, then that does not leave very much breathing room if bidders have to alter and re-submit (Or in the case of GW, submit for the first time) their franchise bids for them to then be reviewed by the DfT, the franchises awarded and a mobilisation period provided for within the present deadlines of May and July 2013.

Mind you, I cannot begin to speculate whether DOR would step in or the current incumbents would be granted extensions if these bid submissions do over-run thanks to the present situation.

 

[Deerfold]

The media really don't fully understand how the railway works do they?

I've e-mailed them. It'll be interesting to see if they're as quick as the BBC usually are to fix factual errors.