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Virgin's application for a judicial review means the government cannot sign the west coast mainline franchise over to FirstGroup on Wednesday as planned. Photograph: Geoff Caddick/PA
Government transport policy has been thrown into chaos after Sir Richard Branson blocked ministers from stripping Virgin Trains of the west coast rail franchise and a row over Heathrow expansion saw Nick Clegg and David Cameron under attack from senior backbenchers asking for a U-turn on a third runway.
The Virgin tycoon prevented FirstGroup from taking over the London-Glasgow route with a last-ditch application for a judicial review, forcing the Department for Transport (DfT) to postpone a contract signing due on Wednesday morning. Justine Greening, the transport secretary, said the government would defend the bidding process and accused Virgin of double standards. "Had they won this bid they would have thought the process was working just fine," she said.
The DfT said the legal row would not affect the day-to-day operation of the west coast route. The high court is expected to decide if there are grounds for a review within two weeks and a formal review could take up to three months, right up to 9 December when FirstGroup is due to operate its first west coast service.
Branson's intervention crowned a day that saw one of the Conservative party's flagship election pledges put under further pressure by its own side, when the former minister and current chair of the energy select committee, Tim Yeo, warned that David Cameron would consign Britain to insignificance if he did not reverse a ban on a third runway at Heathrow. Demanding a U-turn, Yeo asked the prime minister: "Are you a man or a mouse?"
Yeo was slapped down by Greening, Number 10 and then the deputy prime minister, who also ruled out abandoning a policy enshrined in the coalition agreement. He did, however, suggest an alternative overhaul of London airports.
Instead of changing tack on Heathrow, Clegg said, hundreds of flights should be moved to London's three other airports as a way of preserving Heathrow's hub status and avoiding the need for a new runway.
In a Guardian interview, he insisted that the coalition would stand by its commitment not to build a third runway at Heathrow. He also denied ministers were "sticking our heads in the sand" to calls from business groups warning that Britain is losing business as new routes open up to China from continental European airports.
Clegg said: "We are not going to give the go-ahead to a third runway at Heathrow. But of course I accept, everybody accepts, that the issue of the hub status of Britain's airport capacity is a really important one for our economy."
Citing London mayor Boris Johnson's calls for a new airport in the Thames estuary, he added: "We are kind of lurching from one instant solution to another. One moment it is Boris Island, now it is a third runway. What we need to do as a government is sensibly say we are going to stick to our coalition agreement, but we are not sticking our heads in the sand."
The deputy prime minister said he personally favoured freeing up capacity from Heathrow by moving hundreds of flights to Gatwick, Luton and Stansted airports.
"There are a lot of flights going into Heathrow that aren't necessary for its hub status. If you are being logical about this you would shift a lot of the current flights out of Heathrow to the other three airports, freeing up that hub capacity for Heathrow."
Greening had earlier admitted that it would be difficult to stay in her job if the Heathrow policy was scrapped, having led a constituency campaign in her Putney constituency against expansion. The transport secretary has been mooted to be facing demotion in the forthcoming cabinet reshuffle, in order for the government to stage a U-turn on a third runway. But No 10's restating of Cameron's insistence that he will not bow to pressure over Heathrow appears to bolster her chances of survival.
After a summer of growing backbench dismay at the coalition's flagging fortunes, ministers were startled by the tone of Tuesday's "man or mouse" challenge. Yeo said he had changed his own mind thanks to quieter and more fuel efficient jets.
The South Suffolk MP chose the Daily Telegraph, one of many conservative City and big business interests dismayed by the joint 2010 position adopted in the coalition agreement, in which to set down his less-than-coded challenge. Greening insisted that a third runway would not even provide a brief respite from the south-east's long-term airport capacity problems and said her forthcoming consultation would forge a new consensus for action. Labour, which reversed its own support for the third runway, also backs the consultation.
Johnson, who had been a siren voice within the Conservative party over airport capacity until the Heathrow reversal campaign gathered momentum, urged Cameron to come up with a definitive answer to the capacity issue. "It is plain that the argument over aviation capacity is not going to vanish and he can't long grass this. It is necessary to come up with an answer."
This article first appeared on www.guardian.co.uk
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