Branson's Virgin Trains revival blocked after government opposition
The Office of Rail and Road (ORR) confirmed on Thursday it had rejected Virgin's proposal to relaunch services between London and a range of major cities.
As well as turning down Virgin's application, the regulator also snubbed proposals from FirstGroup and Wrexham, Shropshire & Midlands Railway (WSMR) over fears that the West Coast mainline north of the capital was already too busy.
Virgin, which had planned to offer an alternative to state-run trains on the inter-city route, said the decision was 'a blow for consumer choice and competition'.
It comes after the Government and senior Whitehall officials lobbied against the so-called open access applications, arguing that new services would have robbed Labour's new nationalised railway of vital ticket revenue.
In a letter to the ORR dated June 20, Richard Goodman, director general for rail reform and strategy at the Department for Transport, said that new rail applications must 'deliver benefits without undue cost to taxpayers or existing passengers'.
That followed comments from Heidi Alexander, the Transport Secretary, who told the ORR in January that it should adopt a more rigorous stance on private bids.
The industry group Rail Partners said at the time that the Government appeared to be intent on 'creating the conditions for existing operators to wither on the vine'.
FirstGroup, which was blocked from running trains from Rochdale to Euston via Manchester, said the ORR must be able to 'work without interference,' while stopping short of accusing the DfT of twisting the regulator's arm.
A spokesman said the decision will come at a cost to jobs, private sector investment and growth.
Virgin, which increased annual passenger numbers on the West Coast franchise from 8m to 42m during its 22 years in charge of the route following privatisation in the 1990s, had planned to provide services from London Euston to Liverpool, Birmingham and Preston, adding 5m additional seats.
It would have competed with Avanti, Britain's worst-performing rail operator in the first quarter, with almost 60pc of trains delayed and 6pc cancelled.
A Virgin spokesman said: 'We still believe that, given the opportunity, Virgin's open access routes could play a valuable role in delivering the high-quality train services the British public deserve and GBR wants to encourage.
'Anyone who remembers British Rail would rather forget it. Competition improves services, increases rail ridership, and drives better results for everyone, including the taxpayer.'
The ORR said it reached its decision to block all three applications after concluding that the southern section of the West Coast route had insufficient capacity and that adding further trains would be 'detrimental to performance.'
Stephanie Tobyn, its strategy director, said: 'It was clear that there was insufficient capacity to approve any of the services without a serious negative impact on the level of train performance that passengers experience on the West Coast Main Line.'
Virgin said it would now focus on its bid to compete with Eurostar on the Channel Tunnel route to Paris and Brussels.
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