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Virgin is the favourite to run the London to Scotland services on a short-term contract, which could be as brief as six months. The Department for Transport (DfT) has been examining whether there is a legal case that would allow Virgin, which has operated the West Coast Main Line for the last 15 years, to be awarded an extension or whether the state-owned Directly Operated Railways (DOR) could be mobilised quickly enough to take over the franchise on December 9.
Mr McLoughlin has pledged to inform Parliament of his decision by tomorrow. The West Coast franchise competition was scrapped 12 days ago because of “significant technical flaws” in the way the process was handled by the DfT, which named FirstGroup winner of the competition in August.
Virgin has been pushing for an 18 to 24-month extension, but sources have suggested the DfT could fudge the situation by asking Sir Richard Branson’s rail group to continue running the services for a further six months, or until the end of the financial year in March, before handing over to the DOR, which would operate the franchise until it is re-let.
The DfT has asked recruiters to “test the market” and see if a senior management team could be hired quickly enough to run the West Coast line on behalf of the DOR from December 9, but industry experts believe there is no longer enough time to transfer all of the contracts to the state-owned operator. Usually 120 days is required to transfer all contracts, staff and rolling stock.
A third, half-way house option, which would see Virgin remain in the driving seat for another six months, could help defuse the threat of legal action. Lawyers have warned the DfT it could be in breach of European competition or procurement law if it hands Virgin a new 18 to 24-month contract.
FirstGroup, whose shares plummeted after the Government’s extraordinary reversal, has failed to rule out a legal challenge if Virgin is awarded an extension, while rail union the RMT said it had also taken legal advice on whether the DfT could contravene European law.
This article first appeared on www.telegraph.co.uk
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