Fury over Virgin Rail Group West Coast franchise dividend
Labour has hit out at reports that Virgin Trains and Stagecoach shared £51.2m worth of dividends from the West Coast main line railway.
The BBC has reported the payments were made on the line that links London with Glasgow via the North West, shortly before the two companies walked away from the East Coast franchise which collapsed in June leaving a £2.3bn shortfall for the Government.
Labour said the UK’s rail system was “lining the pockets of billionaires”.
The report claims Virgin Rail Group’s dividends, for the year ending March 31, are almost double the £27.9m that was given back to its shareholders in 2015.
Virgin, which owns 51% of the rail business, with Stagecoach holding 49%, said a strong performance had led to record payments for taxpayers.
Both firms ran the East Coast main line for three years from 2015.
They planned to pay £3.3bn in return for running the franchise until 2023.
But by the end of last year the franchise was experiencing problems, and in June Virgin and Stagecoach handed the franchise back to the Government.
Labour and trade unions accused Virgin of costing taxpayers £2bn.
Transport Secretary Chris Grayling said in May that the companies had lost almost £200m on the East Coast franchise, but there had not been a loss to taxpayers “at this time”.
Labour’s Rachel Maskell told the BBC this weekend that it was “shocking” that money from the West Coast franchise was not being put back into the railways.
She said: “At the same time, Transport Secretary Chris Grayling is letting them off a £2bn bill [for the East Coast franchise] which the taxpayers are having to bail out.
“This shows how franchising completely fails the public… buying a ticket is so extortionate these days that many people can’t afford to travel by rail.”
She said Labour wanted to see dividends reinvested into publicly-owned railways that put passengers at the heart of business.
A spokesperson for Virgin Trains said the West Coast line had seen “industry-leading levels of customer satisfaction thanks to innovations such as automatic delay repay, free films and TV on board, and tickets”.
A Department for Transport spokesperson said: “Virgin Trains continue to be the leading long distance operator in the National Passenger Survey results delivering consistently high customer satisfaction.
“West Coast passengers will see ongoing investment and innovation with the introduction of the West Coast Partnership in 201,” they added.