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 80.

    Complete joke.

  • rate this

    Comment number 79.

    I wonder if the report is brave enough to mention corruption?

  • rate this

    Comment number 78.

    I have a feeling, the people really responsible for this disaster, are sitting quieting in their offices, while letting others take the blame.

  • rate this

    Comment number 77.

    All those supporters of Saint Richard would do well to remember that he was the man who corruptly conspired with British Airways to ensue fuel surcharges on the N Atlantic route remained artificially high. He was spared prosecution because he turned queens evidence against BA. Not much spirit of competition there then. Don't trust hin an inch

  • rate this

    Comment number 76.

    Incompetent Department of Transport ministers cost hardworking taxpayers hundreds of £millions with their shambolic franchise tendering.
    Yet again, nobody in this government has accepted blame. In fact, the minister most responsible, Justine Greening, has since been promoted by Cameron!
    Austerity for plebs. Rewards for wasting taxpayers money to ministers.
    "We are all in this together."

  • rate this

    Comment number 75.

    I regularly use Virgin Trains between the Midlands and London. the service is excellent - rarely is it late, I usually get a seat without a problem and 57 minutes later I'm in the capital. It isn't cheap at peak rate i grant you, but it does the job and does it well. If Dicky Branson makes a profit, good for him. Its called good business. Long live Virgin on the West Coast.

  • rate this

    Comment number 74.

    Why is there no mention of how much this has cost?

  • rate this

    Comment number 73.

    Good news for everybody who has had the misfortune to travel with First Group. Nevertheless, railways should be nationalised so that we can build a network that provides a real alternative to travelling by car. I am glad that at least someone thinks that BT's market share and ownership of a very large slice of the telecoms infrastructure does not impede real competition in the telecoms market.

  • rate this

    Comment number 72.

    70. "Apparently HS2's exponential extrapolation of rail use predicts that there will be more people using rail than live in the UK by about 2070,"

    Wrong. HS2 assumes passenger growth of 2.5% per year until 2040. Considering passenger growth is currently 6% per annum, that is a very cautious assumption.

  • rate this

    Comment number 71.

    @66. RMT have fought nationalisation from day one! You are quoting things not in this article.

  • rate this

    Comment number 70.

    "The tendering process was halted because the Department for Transport made numerical mistake"

    Well that's good news. Perhaps you can apply the same methodology to another multi billion rail project going ahead.

    Apparently HS2's exponential extrapolation of rail use predicts that there will be more people using rail than live in the UK by about 2070, making the investment totally worthwhile!

  • rate this

    Comment number 69.

    The railways are still subsidised as they were pre-nationalisation, but today that subsidy must also cover the profits of private train companies! The whole system is insane and only re-nationalisation can restore sanity. Some UK train companies are actually part-owned by state-owned railways of other European states. So much for free enterprise!!

  • rate this

    Comment number 68.

    We should look to up to the government and the civil service as models for us to follow on how business should be conducted; sad to say this not the case. It starts with parliament; every time I watch one of their politically driven sessions I hang my head in sorrow - what do we need to do to get people in there who will work together in the benefit of the British people and just do what is right!

  • rate this

    Comment number 67.

    'Bring in a manger from Switzerland or somewhere"

    The (wonderful) tube/urban train systems in Sweden, and the (equally) good tram system in Germany are run by Veolia - who are better known to us as Connex.

    The same Connex who are widely acknowledged as the worst operators we have ever suffered, as anyone who was forced to use Connex South East will tell you!

  • rate this

    Comment number 66.

    I love the way Bob Crow blames this government rather than his own members and members of the civil service, who stay in place no matter what party is in power.
    I wonder how many of his 'hardworking, underpaid' members realise he is paid £150,000 out of their money.
    Virgin have done a great job DESPITE Crow throwing everything in their path and deserve to keep the franchise. I use them regularly

  • rate this

    Comment number 65.


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

    So they dont spill the beans on the very top civil servants responsible for the mess , screwing up their knighthoods , pensions and nice jobs with the companies they have been dealing with.

  • rate this

    Comment number 64.

    This was a major debacle by the DfT and it's wasted a lot of money but in the grand scheme of things this is nothing compared to the economic omni-infinite-ed ballsup-disaster-shambles the Labour government left the country in.

  • rate this

    Comment number 63.

    Yet another fine mess.

  • rate this

    Comment number 62.

    Great news.

  • rate this

    Comment number 61.

    let's be pragmatic, not ideological: privatisation works when a competitive market can be created like in the case of BT.
    British Rail went from one State monopoly to regional private monopolies. There is no competition! Without it, rail companies can extract as much as possible profit.
    We need to re-nationilse rail, privatisation has failed.


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