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
    +3

    Comment number 60.

    It's way over time for MP's, Ministers & Civil servants to be made fully accountable for their errors/ incompetence & properly proportionately punished when found guilty, after all THEY are the ones who boast that they can do the job they're given & it's only right that they should suffer severe sanctions when that's obviously not the case! It's called taking money under false pretence isn't it?

  • rate this
    +3

    Comment number 59.

    'Bring in a manger from Switzerland or somewhere...' Well, that would make a change from German Railways, Dutch Railways, French Railways, Paris Metro, Hong Kong Transport and others who run our railways!

  • rate this
    +3

    Comment number 58.

    Why would you give *anything* other than a wooden spoon to First Group? They should be losing their franchises for their sheer incompetence, not being welcomed to bid again in a few years.

    Oh, right, backhanders, gotcha.

  • rate this
    -4

    Comment number 57.

    Renationalisation? Run by The State? Have you seen the state of The State? We are virtually beggared as it is with millions wasted on Quangos and investigations leading to nothing. I dread to imagine the mess that HMG would make of the transport system if they got their hands back on it. Lordy!

  • rate this
    +4

    Comment number 56.

    Come back British Rail, all is forgiven, even the sandwiches.
    But no Crow please, they value thier job/work far too much, one track mind.

  • rate this
    +3

    Comment number 55.

    I see people are having a go at the First Group bus company, but how many of you realise that Virgin is owned 49% by another rival bus company and one whose tactics around the country could well be open for debate. Virgin/Stagecoach trains is one company who i will not travel with. Smelly toilets all the way to Manchester! Is not good for the soul, plus the sea sickness from its tilting trains.

  • rate this
    +2

    Comment number 54.

    Nice- more taxpayers’ cash for convicted tax fraud Richard Branson.

    In all of this, why is no inquiry looking into the relative benefit of public and private ownership of the railways? We have paid out billions in public funds to these companies- I think it is right that the government at least have some idea whether it was worth it.

  • rate this
    +3

    Comment number 53.

    45.Vboulderer
    Who would you have had carry out an investigation into the activities of Civil Servants? More Civil Servants?

    41.Spindoctor
    I would suggest it was Blair/Browns failure to adequately regulate the banks in the first place that cost the taxpayer dearly.

  • rate this
    0

    Comment number 52.

    Let me be absolutely clear that is a mega omni-shambles by this Government/DfT, of which the Prime Minister is ultimately responsible!
    Virgin or ANY of the franchisees should never have been put in this position and it is NOT their fault this is costing the taxpayer c.£100m.
    Virgin deserve to keep this service. They should run MORE UK train services in my view!

  • rate this
    +2

    Comment number 51.

    I have never been a fan of VT. They still haven't cured the smelly (and often not working) toilets; all the 'improvements' have been initiated and paid for by the government whilst the profits go to Branson and Souter. My 'improvements' mean that I can get to London a few minutes earlier (if the trains run on time - I catch the train before the one I need) but there are only half the trains.

  • rate this
    +2

    Comment number 50.

    37.
    Rebecca Riot

    "Perhaps Richard Branson should run British Government,"

    No thanks, I am fed up of being bombarded with weekly junk mail from Virgin Media , despite asking them to stop sending it , without getting a weekly sales pitch from the govt shoved through my door, addressed to the" occupier" to sneak round mail preference rules

  • rate this
    +3

    Comment number 49.

    This is virgin on the ridiculous.

    Someone had to do it.

  • rate this
    +3

    Comment number 48.

    >Where First Group got their name from I'll never know, they are not first >at anything

    Simple, to quote Douglas Adams: "First against the wall when the revolution comes".

  • rate this
    +1

    Comment number 47.

    When the new bids are submitted would it be sensible to have them assessed by the inmates of monkey world. They couldn't make a bigger cock up than the civil servants who assessed the last bid

  • rate this
    +38

    Comment number 46.

    Why are the civil servants at the Department of Transport merely suspended (no doubt on full pay) for screwing up the tender process?

    If pen pushers at First Group (or Virgin) had cost their employers millions because of their incompetency they would be straight out the door.

    That's the real difference between the public & private sectors.

  • rate this
    +2

    Comment number 45.

    The report states 'The inquiry into the collapsed tendering process was led by Centrica chief executive Sam Laidlaw'.

    Why was this led by the chief exec of a global energy business (the parent company of British Gas)? Like we trust those crookes to give a fair assessment in the interest of the public!?!?

  • rate this
    +2

    Comment number 44.

    This latest, and final report by Mr Laidlaw will cast more light on why it all went wrong, but is unlikely to name names.

    Name the people. Or are there too many MP's implicated in this debacle

    Once again this has cost the Tax Payer Billions

  • rate this
    +2

    Comment number 43.

    Any chance Virgin Trains could take over the joke that is Southeastern Trains???? We might all manage to get in on time once or twice ...

  • rate this
    -44

    Comment number 42.

    I can't believe some on here are calling for re-nationalisation. Either you weren't born then or you can't remember the terrible service they offered. Next you'll be calling for Tesco's, Sainsbury's, Asda, etc. to be gone and for the Government to organise food distribution, a loaf of bread and pint of milk a week, for everyone.

  • rate this
    +3

    Comment number 41.

    // 8. Keith Burtons

    Sir he may well (Virgin) have "cost" the taxpayer £13 per person in regard to Northern Rock, but his offer was the ONLY offer on the table. The Government did not have to sell it at that time, they chose to due to Political Expediency, EU Regulator had previously stated it should be sold ASAP, but even they changed opinion at the time.
    It was the Gov's fault for selling it.

 

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