2004-07-15 A new structure to deliver a better railway (Department for Transport)

_______________________________________________________________

date 6 August 2004
source Strategic Rail Authority
type Press release

summary An announcement that the Virgin CrossCountry franchise had not been successfully renegotiated after being operated as a management contract since 2002.

The Strategic Rail Authority (SRA) today announced that it had not received an acceptable offer from Virgin Rail Group (VRG) in the renegotiation of the CrossCountry rail franchise.

A Best and Final Offer for a single -tender deal running to 2012 was recently received from VRG, but was significantly too high to pass the value for money test that the SRA undertakes on behalf of taxpayers. As a consequence, the SRA informed VRG this afternoon that it is ending negotiations on the CrossCountry franchise.

The SRA's rights, which are designed to protect the interests of both passengers and taxpayers, are contained in a 'Letter Agreement' signed between the two parties in July 2002. This gives the SRA the right to terminate the franchise should it be unable to reach agreement on a long -term deal.

The SRA has informed VRG that it reserves its right to terminate the franchise, and that it will inform VRG of how it intends to take matters forward on the franchise in the near future. In the meantime, the annual budgeting
process will continue on the franchise.

Services on CrossCountry are unaffected.


Notes to Editors
1. VRG continues to operate the CrossCountry franchise under a 'Letter Agreement' between the SRA and VRG that has been in place since July 2002, and which supplements elements of the franchise agreement which commenced in 1997. The agreement provides for an annual budget for the franchise to be agreed between the SRA and VRG or, if necessary, determined by the SRA, in order that VRG receives no more money than is necessary to operate the services under a defined profit margin.
2. VRG also operates the West Coast franchise under the Letter Agreement.
3. VRG is a joint venture between the Virgin group of companies (51%) and Stagecoach Group plc (49%).
4. This decision has been made on value for money grounds and is not a reflection on the progress that Virgin CrossCountry has made in terms of performance, as evidenced by the latest National Passenger Survey in which CrossCountry was rated the top performing long distance train operator.

Railhub Archive ::: 2004-08-06 SRA-001