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Branson hits back over rail deal criticism

Image copyright Virgin trains East Coast
Image caption Sir Richard Branson and group on an East Coast Virgin train

Sir Richard Branson has actually countered at critics who state the federal government has actually bailed out Virgin Group and its partner in the East Coast rail franchise.

In November, the federal government permitted Virgin and Stagecoach to withdraw from running the service 3 years early.

Lord Adonis, previous chair of the National Infrastructure Commission, stated the relocation might ultimately cost the taxpayer billions of pounds.

Sir Richard stated the offer had actually cost Virgin and Stagecoach £ 100m.

In 2014, Virgin and Stagecoach signed an offer to run the East Coast line till 2023, guaranteeing the federal government £ 3.3 bn in premiums.

In a blog site released on Friday, Sir Richard stated the 2 business had actually been guaranteed a substantial upgrade of the tracks by Network Rail, which would have enhanced dependability and permitted more travelers to be brought.

“Considerable hold-ups” to the upgrade and bad track dependability “torpedoed” the presumptions of the initial quote, the blog site stated.

Sir Richard stated he and his partners had actually not taken advantage of the federal government’s relocation, however had actually lost “well over £ 100m in overall” without getting a cent in dividends.

Analysis: Richard Westcott, BBC transportation reporter

Virgin/Stagecoach were indicated to pay around £ 1.6 bn to the federal government in the last years of the agreement.

It will be a while prior to we understand what does it cost? the brand-new business will pay rather, however remembering that Virgin/Stagecoach were losing money, it is bound to be less.

Lord Adonis states other having a hard time rail companies may request comparable aid.

He composes in his letter: “The bailout will cost taxpayers numerous countless pounds, perhaps billions, if other loss-making rail business require equivalent treatment.

“It benefits just the billionaire owners of these business and their investors, while pressing rail fares still greater and threatening nationwide facilities financial investment.”

More from Richard Westcott

Although Lord Adonis accepts Network Rail cannot fulfill a few of the pledges on which Virgin and Stagecoach based their quote to run the franchise, he called the relocate to launch the business from the agreement “indefensible”.

He likewise stated he was “all set to share uncomfortable proof with the general public Accounts Committee and other Parliamentary committees examining the bailout”.

The information of the brand-new East Coast agreement have yet to come out.

Read more: http://www.bbc.co.uk/news/business-42577698