Virgin Trains has urged the Government to let it take over management of many of Britain’s stations as Ministers launched a review into rail funding.
The West Coast Main Line operator said it could improve stations at little or no cost to the taxpayer if it was allowed a longer franchise and greater freedom.
Transport Secretary Philip Hammond has appointed Sir Roy McNulty, chairman of regional regeneration agency Advantage West Midlands, to lead a review into cutting costs.
It follows an initial study by Sir Roy which warned the existing rail network “may become unaffordable” unless changes are made.
The review will provide an opportunity for Virgin to push its case for longer franchises, which was a source of tension between the train operator and the previous government.
Virgin co-owner Sir Richard Branson has claimed that a longer franchise would allow Virgin to invest up to £1 billion in the railway, significantly cutting journey times between London and Birmingham.
But Virgin insists that it cannot make the investment under the terms of the current franchise, due to expire in 2012, because there is no guarantee it would be allowed to reap the rewards of the investment.
Former Labour transport minister Tom Harris accused Virgin of trying to “blackmail” the Government, after the operator said it could not justify the cost of adding new carriages to its fleet of Pendolino trains unless its West Coast Main Line franchise was extended.
A spokesman for Virgin said: “Most of our cost base is determined by Network Rail’s costs. This report finds they are 30 to 50 per cent more expensive than alternative options, and that this has an impact on our cost.
“We also believe that there is scope for efficiencies from operating companies such as ourselves, if we are given longer franchisees and less detailed control from the Government so that we could get more of our commercial expertise into our operation.
“For example, at the moment major station improvement works tend to be done by Network Rail, but we as a train operating company could undertake that work. And we feel that as we are closer to the customer, we have a good feel for what they want from station redevelopment.
“Give us a long franchise and it could be done through no cost to the taxpayer.”
While the largest projects such as the redevelopment of New Street station would require public funds, Virgin could pay for improvements to other stations through the profits it would receive from increasing passenger numbers as a result of improving services, he said.
Birmingham’s International Station came under fire recently for its shabby appearance and poor lighting.
Business Voice West Midlands, an umbrella group for businesses in the region, wrote to the Department of Transport to improve it.
Sir Roy’s initial report said: “The existing railway may become unaffordable – so we are faced with the choice of changing the way we operate or else decreasing the size and the quality of the network.
“Reducing the cost of providing rail services is critical if the industry is to continue to grow, as well as being critical to the health and prosperity of the wider economy and thus the industry.”
Taxpayer support for the network had risen from £2.3 billion in 1993-94 to £5.2 billion in 2008-09, he said.
He added: “International benchmarking carried out by the Office of Rail Regulation as part of the recent periodic review suggested that Network Rail is 30 to 50 per cent less efficient in terms of maintenance and renewals expenditure than comparable European railways.”
Mr Hammond said: “Passengers and taxpayers will rightly ask why it is that our railways in the UK are so much more expensive than those in the rest of Europe.
“Given the very significant financial constraints that we face, it is essential that we drive out inefficiencies and reduce costs. Better value for money is the only way we are going to protect train services and avoid very high rises in train fares.
“This report by Sir Roy McNulty will play a key role in informing how we go about creating an efficient and modern railway fit for the 21st century that provides taxpayers with value for money.”