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U.K. Lawmakers Seek Probe of FirstGroup Rail Win Over Virgin

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Aug. 24 (Bloomberg) -- The head of the U.K. Parliament’s Transport Committee called on the government to delay signing a contract for FirstGroup Plc to run Britain’s premier rail route instead of Virgin Trains so the panel can probe the deal.

“This franchise will affect millions of passengers and last for up to 15 years,” Louise Ellman said in an e-mailed statement today. “A great deal of public and private money is at stake. I have no fixed view on the matter and no preference for any of the bidders. My wish is simply to bring greater transparency to the process.”

The Department for Transport said Aug. 15 it was awarding the franchise for the West Coast line, operated by Virgin since 1997, to FirstGroup for at least 13 years in a deal generating 5.5 billion pounds ($8.7 billion) for the government. Ellman said she’d written to Transport Secretary Justine Greening asking her to delay the signing planned for Aug. 28.

Virgin founder Richard Branson responded to the franchise award by announcing he’ll quit the U.K. rail business, describing the decision as “insanity” that could end in bankruptcy. The RMT rail union said that the winning tender, worth more than Virgin’s, was based on a “massive cuts plan” that it will oppose.

The decision excluded Branson from the U.K. rail industry for the first time since its privatization. He said he made a “strong and deliverable” offer for the West Coast line, which transports 31 million people a year between London and the cities of Birmingham, Edinburgh, Glasgow, Liverpool and Manchester.

Online Petition

A petition on the government’s website calling for the franchise award to be looked at again has now attracted more than 100,000 signatures, meaning that it will be considered by lawmakers for discussion in the House of Commons.

“I think we must debate the issue in Parliament,” Tim Farron, the president of the Liberal Democrats, Prime Minister David Cameron’s junior coalition partners, said in a posting on the Twitter microblogging website. Farron represents a district in northwest England through which the West Coast line runs.

“We’re hoping for a delay in the process to give Parliament and the select committee time to scrutinize this decision and maybe for the department to go over their sums,” Ken Gibbs, a spokesman for Virgin Trains in London, said by phone.

‘Moving Fast’

Virgin Trains Chief Executive Officer Tony Collins has said he’s “humbled” at the support shown for the company’s West Coast bid, Gibbs said. While Parliament isn’t currently sitting, things are “moving fast,” he said.

“Our published processes and criteria do not provide for a role in a live procurement exercise for the Transport Select Committee, which has not requested any kind of dialogue on this issue before now,” the Department for Transport said in an e-mailed statement. Greening “is due to appear in front of the select committee in early September and will be happy to talk about the business of her department.”

To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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