Virgin cashes in on West Coast fiasco

Sir Richard Branson's Virgin Trains company is set to receive at least another £200m from the taxpayer as a result of the fiasco over the West Coast Main Line upgrade, which is running so late and so over budget that it will have to be closed for four months next year. Sir Richard has already received £106m of taxpayers' money.

The upgrade of Britain's busiest railway line has escalated in six years from £2bn to more than £10bn and is running at least two years late. But under a clever deal negotiated by Richard Bowker, the present head of the Strategic Rail Authority while he was an employee of Virgin Trains, Railtrack has to pay crippling penalties for defaulting on the timetable.

Now, because Sir Richard's plans to run 140mph trains on the line have been dashed, Mr Bowker has been forced to underwrite the extra costs to Virgin's franchise until March 2003. But experts say that with no hope of the upgrade being completed within the foreseeable future, Virgin Trains will be in line for another payment of more than £200m in the year up to 2004, and possibly even more in the year to 2005.

Under the deal negotiated by Mr Bowker, subsidy was due to reduce progressively. In the current year, the taxpayer was due to receive a £5m premium from Virgin Trains West Coast operation, which would no longer be subsidised, and the subsidy for its Cross Country operation was due to be £57m. Instead the west coast line is getting a £40m subsidy and the cross country lines, which operate nearly all express services outside the capital, will get an extra £66m. Virgin has already received £91m compensation from Railtrack as a result of the Hatfield accident.

The modernisation of the line, from London to Birmingham, Manchester, Liverpool and Glasgow, is turning into one of the most expensive and bungled civil engineering contracts in post-war Britain.

The costs have risen sixfold and the sum involved is more than any other rail project in the world. It exceeds the total budget of many third wold countries. Yet its original aims – of running 140mph tilting trains to Glasgow – will never be realised. Last week it was hinted that the trains will only travel at 125mph.

British Rail was running 125mph trains on many of its main lines in the 1970s.

Critics say that Railtrack had no idea of the state of the line when it signed up to the modernisation deal nor did it undertake a proper audit of its assets. The management team constantly changed and several engineering audits were scrapped. The worst mistake was to use expensive track-laying machinery which would not allow trains to run on adjacent lines.

Stewart Francis, chair of the Rail Passengers Council, the government-backed consumer body, said: "We want to see what the passengers will get for this money.

"What sort of railway is going to be developed on the West Coast Mainline? We're still not clear about that yet. We believe that passengers have been paying premium prices in the expectation that something better is going to be produced. Let's hope that it is."

Last week Railtrack announced a complete shutdown on parts of the line in an attempt to speed up the project. A 40-mile stretch from Staffordshire through Stoke to Cheadle Hulme Greater Manchester will be closed for 17 weeks next summer. And another, four-month, shutdown will hit the line between Crewe and Cheadle Hulme in early 2004. The new measures should allow trains to run at 125 mph by 2004.

The RPC has already called for a public enquiry into the way the redevelopment has been handled. But for now it is waiting until autumn when Mr Bowker and the SRA have promised to reveal the future shape of services on the line.