Richard Branson's Virgin Rail has lost its bid to continue running one of Britain's most important rail franchises, the west coast mainline, to the UK's largest rail operator, FirstGroup.

The department of transport made the decision to award the franchise to FirstGroup after it submitted a £5.5bn offer to run the line. The service is one of the country's major train arteries, running from London through to the central belt of Scotland and serving 31 million passengers a year.

The news is another bitter blow to Sir Richard Branson, who has lost two previous bids to secure rail franchises on the East Coast and CrossCountry routes. The famous entrepreneur has been involved in the industry for 15 years, and called Virgin Rail's loss of the franchise 'very disappointing news'.

FirstGroup will take over the west coast line from 9 December and is due to operate the service until 2026. The company say 11 new six-car trains will be introduced on the Birmingham to Glasgow route, and that fares will be reduced by as much as 25 per cent in the first two years of its franchise.

Concerns have been raised that FirstGroup may have bid too much for the franchise, and that the company might attempt to reduce running costs through cutting staff pay and working conditions.

RMT general secretary Bob Crow has warned FirstGroup that they will mount a massive industrial, political and public campaign to stop any attacks on its members' jobs.

I'm Alfred Joyner, for the latest news headlines, go to our website, IB