The future of services on the West Coast Main Line has hit the buffers as the Government made a shock announcement that Virgin Trains' bid for the franchise due to be decided in June has been thrown out.
The company which has run its Pendolino trains on the tracks through Lancashire since March 1997 has said it is shocked by the decision which the Department for Transport says is linked to problems with covering staff pensions under the company's current bid.
Virgin is partnered with Stagecoach and the French state-owned rail group SNCF in the application to continue running inter city trains on the line and the new HS2 services should that track be built.
Virgin fully supported the long running campaign to bring back a direct train link between London and Blackpool to boost the resort's connectivity and chance of attracting visitors from the south.
The DfT said that Stagecoach's bid for the West Coast Main Line and two other routes, the East Midlands line and the South Eastern line, failed to comply with the rules, particularly as regards to pensions.
Bidders for the franchises were asked to bear the full long-term funding risk on relevant sections of the Railways Pension Scheme, Stagecoach said.
It added that the Pensions Regulator is seeking additional funding because of "serious doubts" over the Government's ongoing support for the industry-wide scheme.
Stagecoach chief executive Martin Griffiths said: "We are extremely concerned at both the DfT's decision and its timing. The Department has had full knowledge of these bids for a lengthy period and we are seeking an urgent meeting to discuss our significant concerns.
"The Pensions Regulator has indicated that an additional £5 billion to £6 billion would be needed to plug the gap in train company pensions."
The rail industry proposed solution would have delivered an additional £500 million to £600 million into the scheme.
This, Mr Griffiths said, would have provided "better stability and security for members" and better value for taxpayers.
"We are shocked that the Government has rejected this for a higher-risk approach. We would urge that a full independent value-for-money review is undertaken into this issue without delay."
A Virgin Trains spokesman said: "We’re very disappointed by the DfT’s unexpected decision. We’ve led the industry for more than twenty years with our ground-breaking innovations, such as automatic delay repay, and award-winning customer service.
"We’re studying the DfT’s decision carefully to understand why they’ve taken this action and would like to reassure all our customers that they can still book and travel as normal."
The company said it had improved services for passengers from introducing tilting Pendolino trains, to a pioneering automated delay repay scheme, introducing onboard entertainment streaming services, and becoming the first franchised rail operator to offer m-Tickets for all ticket types.
Lancashire based rail sector champion for disabled travellers Stephen Brookes said the news was a total bombshell.
He said: "I am deeply disappointed by this decision the excellent customer service that we have seen from Virgin Trains may now change under a new franchise.
"It is to be hoped that common sense prevails here. But at the moment we have to be concerned about what the future is for the West Coast Main Line.
"Virgin have always from when it re-introduced direct services from Blackpool to the capital four years ago had a good relationship with this part of the world and their staff relations with customers is excellent so this announcement has to be a concern for Blackpool
"If this is indeed about funding then the worry is that quality of customer service in future will suffer. We do not need a pared down national railway service."
A DfT spokesman said: “Stagecoach is an experienced bidder and fully aware of the rules of franchise competitions. It is regrettable that they submitted non-compliant bids for all current competitions which breached established rules and, in doing so, they are responsible for their own disqualification.
“Stagecoach chose to propose significant changes to the commercial terms for the East Midlands, West Coast Partnership and South Eastern contracts, leading to bids which proposed a significantly different deal to the ones on offer.
“We have total confidence in our process. We have awarded the East Midlands franchise to Abellio after they presented a strong, compliant bid.
“Stagecoach have played an important role in our railways and we hope they will continue to do so post the conclusions of the Rail Review. However, it is entirely for Stagecoach and their bidding partners to explain why they decided to repeatedly ignore established rules by rejecting the commercial terms on offer.”