West Coast Mainline deal failure criticised


Transport Secretary Patrick McLoughlin: "We'll create a simpler and clearer structure and government process for rail franchise competitions"

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A report into the collapse of the £5bn West Coast Mainline franchise deal has blamed a "damning failure" by the Department for Transport (DfT).

The Laidlaw report was published hours after the government announced Virgin Trains will run the service for another 23 months - until 9 November 2014.

FirstGroup was told it had won the bid in August.

The government scrapped that decision in October because of numerical mistakes - at a cost of at least £40m.

The mistakes came to light after bidder Virgin Trains, which had run the West Coast Mainline since 1997, launched a legal challenge against the decision.

Three senior civil servants at the DfT, who were suspended after the scrapping of the bid, can now return to work.

One of the officials, Kate Mingay, launched a legal action against the department last week, saying her role had been "inaccurately" portrayed.

The independent inquiry into the collapsed tendering process was led by Sam Laidlaw, chief executive of Centrica, the owner of British Gas.

He said on Thursday his report had revealed "a lack of transparency, inadequate planning and preparation, as well as a complex and confusing organisational structure with weak quality assurance and insufficient governance oversight".

'Inaccurate reports'

Transport Secretary Patrick McLoughlin, revealing the report's findings to MPs in the Commons, said it made "extremely uncomfortable reading" for his department.

He said there was a "damning failure" by the DfT which had to be put right. The report had found "serious problems" and "unacceptable flaws", he said.

Start Quote

These incorrect figures varied in ways which were wrong”

End Quote Transport Secretary Patrick McLoughlin

But Mr McLoughlin cited Mr Laidlaw's findings that ministers had been given inaccurate reports and they had awarded the contract without being told about flaws in the bidding process.

The transport secretary said the investigation by Mr Laidlaw - who will give evidence to the House of Commons Transport Select Committee on 18 December - found department officials "wrongly calculated the amount of risk capital bidders would have to offer to guarantee their franchise proposals".

"These incorrect figures varied in ways which were wrong," he said.

In his report, Mr Laidlaw also noted constant changes of permanent secretary at the DfT and said resources were "excessively stretched due to the government's spending review and the competing pressures of other projects".

Mr Laidlaw's initial findings, revealed in October, talked of officials not following their own guidelines, not treating the bidders equally, failing to include inflation in their figures and ignoring warnings of possible problems months before the deal capsized.

BBC transport correspondent Richard Westcott said that, while Mr Laidlaw's final report had not named names, another internal inquiry - the results of which will never be made public - will do just that.

Sir Richard Branson: "I'm sure the government will have learned from past mistakes."

A spokesman for FirstGroup said the report reiterated that it was not at fault and it hoped Mr Brown's review would "provide certainty and confidence in the future of rail franchising".

"It is especially disappointing that passengers and taxpayers will not see the benefits that our successful bid would have delivered," he added.

Virgin boss Sir Richard Branson said his company would "try to continue to do a great job" on the West Coast Mainline now that it had been allowed to run the service for another 23 months.

"It seems that it was a case of people being slightly incompetent and I think the important thing now is to move forward," he told the BBC News Channel.

"Our team are obviously greatly relieved and I think the travelling public are relieved," he added.

TSSA rail union leader Manuel Cortes said the "long-running Whitehall farce that is rail franchising just gets more ludicrous by the day".

"So we have spent £40m of taxpayers' money on a franchise which has stayed with Sir Richard Branson anyway," he added.

'Shocking ineptitude'

But rail customer watchdog Passenger Focus welcomed the Virgin Trains development saying passengers would "welcome the stability this deal will bring".

Start Quote

It's disgraceful, but not out of character for this Tory-led government, how quick ministers were to try to pin the blame on civil servants”

End Quote Public and Commercial Services union

And Association of Train Operating Companies chief executive Michael Roberts said passengers and the rail industry would now have clarity about the next two years on the West Coast line and urged ministers and officials to "get the programme of franchising back on course".

Shadow transport secretary Maria Eagle said the Laidlaw inquiry had delivered "a damning verdict on the government's shambolic and incompetent handling of rail franchising since the election".

And Rail, Maritime and Transport union general secretary Bob Crow said that, "because of the shocking ineptitude right at the top of this rotten government, Sir Richard Branson has muscled his way into a monopoly provider position".

The Public and Commercial Services union, meanwhile, which represents one of the three suspended civil servants, said the report confirmed the issues involved in the bid were "very complex".

"It's disgraceful, but not out of character for this Tory-led government, how quick ministers were to try to pin the blame on civil servants," it said.

West Coast Mainline map

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  • rate this

    Comment number 40.

    What a shambles. Renationalise, you know it makes sense.

  • rate this

    Comment number 39.

    So, how much does Virgin Trains pay in 'Royalties' to Richard Branson so that it doesn't appear to make much profit? And which tax haven holds the accounts that all those profits accrue to?

  • rate this

    Comment number 38.

    Congratulations UK! The right decision. I commute between Manchester and London; the Virgin service is great and they deserve this extension after the mess of the franchise pitch. This is not Tory or Labour, it is a shining example of what happens when there is too much public service, people get lazy and complacent. Congratulations to the entire Virgin team.

  • rate this

    Comment number 37.

    Two messes in a week for this Tory misgovernment

    First George and his budget and now scuttling off quick in the face of the rail framchise debacle

    Perhaps Richard Branson should run British Government, not Dave and George, our musical hall comedy act, and booed off yet again

  • rate this

    Comment number 36.

    I would rather virgin ran the lot to our agenda than be asset stripped and ripped off by the rest of them.

    I would prefer re nationalisation as it cost less for more unlike the current formula for everything. the buses too while we are at it.

  • rate this

    Comment number 35.

    When the new round of bidding starts we need to make sure this is not a situation similar to selling your house.Either go with a realistic estate agent or go with the one who promises a vastly inflated value which results in your house not selling and a year later suggests you drop the price!

    We need to somehow evaluate what different bids promise and if they are really achievable.Difficult.

  • rate this

    Comment number 34.

    There are countries where train travel is an absolute joy. If we are willling to look around the world to find the best man for the job at the Bank of England , should we look for some staff from somehere like Switzerland to come and sort our railways out for us?

  • rate this

    Comment number 33.

    @24 paulthebadger

    I agree. I went to Russia once, it was -7 outside and the trains, planes, buses and cars all ran as normal with no gritted roads/runways. The reason? Because people use COMMON SENSE, something seriously lacking in "Great" Britain nowadays.

  • rate this

    Comment number 32.

    A sad day for all those who actually have to use this service. We now have to continue suffering overcrowded, poorly run trains for another two years. Branson's PR machine triumphs once again.

  • rate this

    Comment number 31.

    I am just back from Japan. They have privately run railways there too.

    Compared to the service that is offered over there, the rail franchise holders here seem to be more like flys fighting over a fresh turd rather companies with serious business development and investment plans.

    I dont care who wins the franchise as long as they actually do something other than steal money from commuters.

  • rate this

    Comment number 30.

    23 months take it up to the next election - how convenient.

  • rate this

    Comment number 29.

    40 million of my hard earned pounds, and we're right back to where we were at the beginning of this whole process!

    Is it any wonder we're in such a financial mess when we've got such incompetence running the country.

  • rate this

    Comment number 28.

    RonC has the most valid point regarding all of this - What happened to the civil servants who "got their sums wrong",when they miscalculated the original bid? We are told 3 officials are suspended, but they are probably on full pay and may well keep their jobs. It should not take months to sort out who made such appalling errors. A private enterprise would have been straight on the case.

  • rate this

    Comment number 27.

    I think you may be confused, Cross Rail is still under construction and operates no services at present. Electrification of the GWML has started and is funded by Networkrail, not any of the Train Operating Companys.

  • rate this

    Comment number 26.

    BBC,stop claiming that the West Coast lines runs from London to Birmingham to Manchester to Glasgow.It runs through Warrington in the NW,(halfway between Liverpool and Manchester)with branches to both cities.It would be more accurate to say London,Birmingham,Preston,Glasgow! Are you doing the government's dirty work preparing Merseysiders for being left off the HS2 extension?Get the facts right!

  • rate this

    Comment number 25.

    "The case for renationalisation of Britain's railways is now overwhelming."

    No Bob, there is no case whatsoever. Under no circumstances do I want an infrastructure that people base thier day to day lives on be at the mercy of a whimsical tory or labour (no difference) government. Remember the Beechings cuts.

  • rate this

    Comment number 24.

    Train services in Britain are overpriced, overcrowded and stop at the first announcement of snow. The parking areas that service the stations are also seriously overpriced.
    Look to Germany and Holland to see how to run a train service and if we cannot replicate it, ask one of them to run it for us.

  • rate this

    Comment number 23.

    Virgin should turn round to the Government at this point and demand DOUBLE there fees to run the franchise.
    They were messed about abused and vilified by this sorry mess of an excuse for a Government.
    Virgin and the Public deserve better than this, and if they make a mess of this Franchise again the costs should be borne by the Tory MP's personal pockets.
    There is no excuse for it.

  • rate this

    Comment number 22.

    Another Government shambles, How much money has been lost over this fiasco, railways should be brought back into public ownership. I am ann EX TORY voter, I have never voted for anyone else, next election I will vote for Labour.

  • rate this

    Comment number 21.

    At least a miserable year ends on a good note. I have to say every time I have used the Virgin pendolino the service has been fantastic.


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