The Secretary of State for Transport (Mr Patrick McLoughlin)
On 15 October 2012, Official Report, column 6WS, I announced to the House that following the cancellation of the inter-city west coast franchise competition the Department for Transport was commencing negotiations with Virgin Rail Group (VRG).
I can today announce that negotiations have concluded successfully and that Virgin trains will continue to operate services on the west coast main line.
After careful consideration I believe taxpayers, rail passengers and the wider rail industry will be better served by moving directly from this agreement with VRG to a longer-term franchise on the west coast main line. Doing so will provide greater certainty for passengers, minimise disruption for all stakeholders and enable us to maximise the benefits for taxpayers and west coast passengers. For this reason the new franchise with VRG will be for up to 23 months.
I am also pleased to announce that passengers will not only experience the same levels of service they have previously enjoyed but will also benefit from improvements to previous levels.
In addition this agreement coincides with the successful completion today, on budget and ahead of schedule, of a project to deliver 106 new Pendolino carriages on to the west coast main line.
The new carriages, which will see up to 28,000 extra seats provided each day, are being introduced with £1.5 billion of Government support.
Under the new franchise agreement, there will also be a new hourly service between London and Glasgow.
This franchise will operate as a management contract, with both revenue and cost-risk being borne by the Government. In return VRG will receive a margin of 1% on revenue. The contract also makes a provision for the Department and VRG to agree revised commercial terms that would see VRG take greater revenue and cost-risk in the period to 9 November 2014.