Virgin trains East Coast
Sir Richard Branson, has hit back at critics who say that the government has bailed out Virgin Group and its partner in the East Coast rail franchise.
In November, the government allowed the Virgin and Diligence to withdraw the execution of the service with three years in advance.
Lord Adonis, former National president of the Infrastructure Commission, said that the measure would eventually cost the taxpayers thousands of millions of pounds.
Sir Richard said that the agreement had cost the Virgin and to the Diligence of 100 million pounds.
In 2014, the Virgin mary, the Diligence, the signing of an agreement to run the East Coast line until 2023, with the government’s promise of £3.3 million in premiums.
In a blog published on Friday, Sir Richard said that the two companies had promised a huge improvement of the routes of the Railway Network, which have improved reliability and allowed more passengers to be transported.
“A delay” to the update and low track reliability “torpedoed” the hypothesis of the original offer, the blog said.
Sir Richard said that he and his companions had not benefited from the government’s decision, but had lost “more than 100 million pounds in total,” without receiving a penny in dividends.Analysis: Richard Westcott, BBC transport correspondent
Virgin/Stagecoach were intended to pay around £1.6 bn to the government in the last years of the contract.
It’s going to be a while before we know how much the new company will pay in his place, but taking into account that the Virgin/Stagecoach were losing money in cash, is bound to be less.
Lord Adonis says another struggling railroad companies might ask for similar help.
He writes in his letter: “The bailout will cost taxpayers hundreds of millions of pounds, possibly billions, if other loss-making railway companies of the demand of equal treatment.
“Only benefits the billionaires owners of these companies and their shareholders, while pushing railroad rates even higher and threatening national investment in infrastructure.”
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Although Lord Adonis accepts Network Rail does not fulfill some of the promises that the Virgin and Diligence, based its bid to run the franchise, which he called the liberation movement of the enterprises of the contract “untenable”.
He also said that he was “willing to share troubling evidence to the Public Accounts Committee and other Parliamentary committees to investigate the rescue.”
The details of the new East Coast contract are not yet out.