“I want to see further improvements to services to Glasgow and Edinburgh and a significant improvement to services to North Wales,” he added.. “Nobody else has presented a business plan to Railtrack for this type of project,” said a spokesman.Mr Swift said the plan had to be sensitive to the needs of the railway as a whole. GNER has proved phenomenally successful, beating the revenue British Rail raked in by more than pounds 30m since it took over in 1996, taking pounds 310m.”Glasgow [Virgin's current main station] is 40 per cent larger than Edinburgh and Virgin runs a 35 per cent worse train service from there than we do from Edinburgh,” Mr Garnett said.GNER points out that it cannot respond in kind and “attack” Virgin’s market on the west coast. Hidden in the small print of the deal negotiated with Railtrack by Virgin, controlled by Richard Branson, is a provision for a new Virgin service linking London and Edinburgh.
The plan would see Virgin, which by 2001 will have a train linking the two capitals with a journey time of 3 hours 50 minutes, competing head to head with GNER’s east coast service which, at best, take four hours.Christopher Garnett, GNER’s chief executive, described the move as Virgin “cherry picking”. The dividend will see a 15 per cent increase to 21.2p, it said.GUS shares closed 6p higher at 760p.. A RAIL WAR between Great North Eastern Railways and Virgin Trains loomed yesterday after the rail regulator approved the pounds 2bn West Coast Main Line upgrade. The company also said that Peter Birch, the former Abbey National chief executive, would succeed Sir Richard Lloyd as chairman in May, if the GUS bid were defeated.Argos is forecasting first half profits of pounds 35.9m, an increase of 27 per cent.

There is now a case for saying that GUS needs Argos more than Argos needs GUS, given the competitive threat which Argos poses through the extension of home delivery and through its joint venture with Littlewoods.”Separately, Argos announced that it will close its two First Stop stores at a cost of pounds 2m. These were a test of a lower priced warehouse style operation. However, it said cash generation was strong and interest cover would stand at 5.5 times.Under takeover rules, GUS has until next Thursday to make its final offer.One analyst said: “If they walk away having bid 570p they really do look rather opportunistic. “They have overdone the cash distribution placing the company in a perilous financial position They have shot themselves in the foot. GUS may even say its 570p or that’s it.”Argos admitted that returning pounds 431m to shareholders would give the company debts of more than pounds 300m and negative net assets. “They are making a reasonable show of their defence and I think GUS might have to pay up quite a bit more to get it,” said one senior fund manager.Lord Wolfson, GUS chairman, maintained the pressure with another attack: “It is extraordinary that, after a series of profits warnings, Argos believes it deserves a blue chip price earnings multiple similar to M&S, Kingfisher and Boots.”He said the profits forecast was “imaginary” and the calculation of an implied Argos share price “totally unrealistic”.Analysts at stockbroker NatWest Securities criticised Argos, saying it was returning too much cash to shareholders and that GUS might not need to raise its offer at all to win.

I feel bullish.” Urging shareholders to reject the offer he added: “GUS has misjudged it. The offer woefully under-values the business.”Argos’s institutional shareholders appeared supportive yesterday and most said the new management team had raised the stakes significantly since the bid battle started. The cash return of 150p per share came as Argos unveiled an upbeat profit and dividend forecast for the first six months of this year. It also claimed the implied value of an ongoing share in Argos was 700p including the cash return, far higher than GUS’ 570p offer.
As Argos shares dipped 2p to 646p, most analysts said they expected GUS to increase its bid next week with some saying the home shopping group may have to add up to pounds 1 per share to its current offer.An upbeat Stuart Rose, Argos’ new chief executive, said: “I think our chances [of fighting off the bid] are extremely good. A High Court judgment against the corporation, CTIETCC was ignored and Mr Gosling got his money back only after obtaining an order to seize its assets in Hong Kong.It is a salutary story which Western politicians as much as businessmen should contemplate before they embrace China as the next economic miracle, only to be sorely let down once again.. ARGOS, the catalogue retailer, unveiled the final part of its defence against Great Universal Stores’ pounds 1.6bn bid yesterday with plans to return pounds 431m to shareholders if they turn down the GUS offer.

Everywhere you look, Western companies are looking for a slice of the action whether it be lubricants from Burmah Castrol, air fresheners from Reckitt and Coleman or condoms from London International.Companies falling over themselves to do business with China could do worse than reflect on the experience of Richard Gosling, recounted in the columns of this paper on Tuesday. Mr Gosling lost millions of pounds in a venture with China’s 14th largest state-owned corporation to build printed circuit boards in China. Stop for a second and think of the unstoppable tidal wave of social unrest that threatens to create.The rush of Western companies seeking to get a toehold in China is extraordinary. Airbus wants to build commuter jets with the Chinese, Rolls-Royce wants to design engines, BAA wants to run their airports and Zeneca is putting up a weedkiller plant. Moreover, the pace at which economic reform is being pursued may prove unsustainable.The Chinese state, a vast bloated bureaucracy, is seeking to reduce its payroll by the equivalent of the entire working population of the United States. For all Mr Zhu’s reforming zeal it is important to remember that China is still run by a totalitarian regime.Furthermore, it remains bureaucratic and corrupt while its banking system is not that healthy. Asked whether the Chinese leader was the sort of man Mr Blair could do business with, Mr Blair’s official spokesman replied: “Mr Blair did business with Mr Zhu.”It is all rather alarming.

China may be a vast potential market with 1.2bn potential customers and a growth rate that would have made even the Tigers roar before the onset of their present troubles.But in vast swaths of the country, China remains a feudal economy with a physical infrastructure that is at best crude and, in many areas, non- existent. Since then the London market has doubled in value to $2,000bn, passing Tokyo on the way down.A similar Japanese renaissance is not impossible But right now it looks unlikely. That is why Western leaders are subtly shifting their allegiances towards Peking in the event that China, not Japan, becomes Asia’s economic powerhouse in the 21st century.Mr Blair has made the transfer from fan of Tiger to friend of China seamlessly, feting the new Chinese premier Zhu Rhongi as a “fellow moderniser”. In a week when the FTSE 100 has breached the 6,000 mark and Wall Street has smashed through 9,000, it is hard to argue with the supremacy of the Western model.That is why Japan launched its Big Bang this week, a process that could eventually see Tokyo opened up as a financial centre in the way that London was a decade ago. In the last week the Nikkei has shed another 7 per cent of its value, putting more pressure on the beleaguered banking sector which has a large proportion of its capital tied up in equities.