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As the Virgin boss unveils his airline’s new India route, he explains why the Coalition is right on austerity but wrong on rail.
Standing in the luxuriant grounds of the British High Commission in New Delhi, Sir Richard Branson greeted the 300 or so local and British businessmen who had come to hear him speak.
“We are standing in the land of entrepreneurs,” the Virgin magnate said. “And what better setting than this?”
With the ornate colonial Victorian residence of the High Commissioner in front of him and the manicured lawns and shrubbery surrounding him, the British entrepreneur looked quite at home.
“How wonderful it is to see Indian entrepreneurs who set up in England,” he continued, doffing his proverbial cap to Tata Group, whose “Made in Britain” branded Land Rovers were parked proudly on the forecourt outside the residence.
A few hours later, and Sir Richard is sitting in the grandiose, £3,600-a-night Grand Presidential Suite of New Delhi’s Taj Mahal hotel, trying to stave off a cold – the by-product of a gruelling travel schedule which in the preceding few days saw him in Moscow and Poland.
Though in India to promote Virgin Atlantic’s new route between London and Mumbai, it is matters closer to home that appear to be his chief concern. Not least Virgin Trains, and its on-off-almost-on-again contract to run the West Coast mainline.
He is clearly frustrated by the events of the past few months. “An awful lot of our business is in the UK and we do very well there,” he said. “However, the Government needs to get their process sorted out in one or two departments.”
The comments are a direct reference to the problems at the Department for Transport (DfT), which led to First Group, Virgin’s rival for West Coast, being stripped of a 15-year contract just weeks after they won the bidding war for it.
“We took over a chunk of Britain’s rail network and took it from the worst to the best. We took it from 9m to 34m passengers a year,” he said.
“We’ve been willing to take risks with the brand,” he continued, suggesting that the recent bidding process did not fully recognise Virgin’s future plans.
Nevertheless, Sir Richard appears undeterred. Despite the fact that just six weeks ago it appeared likely that Virgin Trains – his joint venture with Stagecoach – would be wound up, he is now contemplating a second rail franchise in addition to West Coast.
“If the process is fair, which I’m sure it will be, and open, which I’m sure it will be, then I think it’s very likely we’ll throw our hat in the ring on East Coast,” he said.
Run for the past three years by the Government, following the withdrawal of previous franchisee, National Express, it is thought the bidding process for the East Coast mainline will begin before the West Coast competition restarts.
“We know what needs to be done on East Coast. It urgently needs investment and we’d be delighted to do it.”
He admits he hasn’t spoken to Stagecoach recently about the prospect, but praises the FTSE 250 bus and train operator for being “extremely brave” in the way it supported Virgin during its fight for a judicial review of the original West Coast decision.
It was that legal process that led to the DfT admitting serious flaws in the process.
“I haven’t dusted down the figures,” he says, referring to East Coast. “But over the years we’ve put in various plans including a high-speed line. I suspect that would be less likely, given the Government has gone for the other high-speed line, but we could still push high-speed trains on it.
“I think we could transform the experience for the travelling public on the east coast.”
It is clear that, despite the fact that Virgin now operates in excess of 400 companies in 34 countries, and the fact that he spends most of his time travelling or living on his private Necker Island in the British Virgin Islands, Sir Richard remains very fond of the UK.
As a brand that is inherently tied to the consumer – be it through Virgin Atlantic, Virgin Trains or Virgin Mobile – the group is dependent on the success of the UK economy.
Sir Richard is supportive of the measures being taken by the Government to bring the growing levels of debt under control, and welcomed last week’s news that the economy grew by 1pc in the third quarter.
“I was asked for my advice before the Coalition got into power as to what I thought as far as cutting costs in government, and, to be honest, I was supportive.
“I think sometimes you’ve got to take the pain early on if you’re a company. I would take the pain in order to see the light at the end of the tunnel.”
He appreciates that his support of cuts and austerity measures is not widely popular, and mentions that he and billionaire George Soros have come to verbal blows about their differing views on how to resolve the current economic predicament.
“It’s going to be a bad time whenever it happens,” he says when asked if now is the right time for the Government cuts.
“If you’re overspending, the sooner you can curtail spending the better, otherwise you run the risk of a Greek or Spanish problem.
“Britain hasn’t got into that sort of problem – we’ve managed to keep our credit rating and that’s very important.
“A lot will depend on what happens with Europe as to whether this is a pleasant blip or a sustained blip, but the alternative approach, which obviously the Americans are taking, is a dangerous one for a small country like Britain, I think.”
To aid the UK’s economic rebuilding, Sir Richard has written to the Prime Minister on a number of issues, including handing on some of the unemployment benefit budget to help companies introduce flexible working to reduce unemployment.
That particular plea has, to date, fallen on deaf ears, Sir Richard confesses.
But aides point to Virgin Media’s work on providing small loans for aspiring entrepreneurs and Virgin Money’s selection as one of the launch partners for the Government’s Start-up Loans scheme, with a focus on the North-East and Cumbria.
Of all his UK offshoots, it is Virgin Money on which he gives the most detailed answers, reeling off statistics including the fact that one in three new mortgages in the UK is currently written by the bank, which took over Northern Rock at the start of January.
But, despite The Sunday Telegraph’s well-sourced report a fortnight ago that Virgin Money is intent on making a bid for the 316 Royal Bank of Scotland branches available as a result of Santander walking away from a £1.65bn agreement to buy them, Sir Richard is less convinced.
“My instinct would be that they [Virgin Money] should continue with organic growth,” he said.
“I certainly wouldn’t get in the way of them looking at any opportunities that became available, but it would have to be better than organic growth. We would have to compare the two side by side.”
Sir Richard is not the only shareholder in Virgin Money – the other two are US investor Wilbur Ross, and Abu Dhabi investor, Stanhope Capital. His thoughts are also possibly somewhat at odds with those of Virgin Money’s management, chaired by the former Bank of England deputy governor, Sir David Clementi.
As for the future of Virgin Atlantic, in which he holds a 51pc stake, with Singapore Airlines owning the remainder, he is more certain.
Although last year’s strategic review by Deutsche Bank maintained the status quo, Singapore has not been quiet about the fact that it would like to reduce or sell its shares.
Would it be easier to sell the airline as one, rather than try to find a buyer for Singapore’s stake?
“I wouldn’t ever sell my shares as it’s too much my baby,” Sir Richard said.
“But I think that if Singapore were ever to sell their shares, we would obviously encourage them to sell them to somebody who would bring something to Virgin Atlantic. Something more than just the cheque.”
Would he buy them out?
“I wouldn’t rule it out,” he says, adding that with the internal carriers Virgin America in the US and Virgin Blue in Australia, he probably has enough airline exposure in the “family” for the time being.
When we speak later, having arrived in Mumbai, ahead of the first London-Mumbai flight later today, Sir Richard flags his intention to apply to also fly to Bangalore, Goa and Hyderabad. But he admits that such routes will only be a pipe dream unless Heathrow is expanded, due to the lack of available take-off and landing slots.
He is certainly unhappy with the current situation at the London hub, claiming Heathrow operator, Heathrow Ltd (formerly BAA) and its British rivals have “been getting away with murder” as a result of recent increases in airport charges.
Citing statistics that show the charges have risen on average four times above inflation in the UK in recent years, he snaps: “It’s incredible the Civil Aviation Authority has been so irresponsible in allowing British airports to be putting up their rates at this level.”
After we have spoken, he moves off to greet another 300 well-wishers at a glamorous launch party in the shadow of Mumbai’s Mahalaxmi race course.
Yesterday he flew to Egypt. This week he will be off to Moscow to lobby Russian officials to allow Virgin Atlantic to fly to the country.
Wherever Sir Richard is in the world, and despite suggestions that his children could be well placed to take over the reins, the first man of British business is still very much the front man of the Virgin empire.