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
    +45

    Comment number 100.

    It's a joke isn't it?
    our local library had a cafe but the council decided to turn it into a theatre - polls showed we didn't want it.....
    turns out the figures for the grants were counted twice...so the funding didn't appear
    the builder had signed a contract & got paid £700,000 but did nothing
    The cafe is still there...oh & the builder turned out to be the bro -in-law of a councillor -funny huh?

  • rate this
    +1

    Comment number 99.

    Well, it's a bit of a relief. As bad as Virgin are if the alternative is First then the longer they're shut out the better. They all run over-jammed uncomfortable badly-designed newish trains that are a lot worse than the ones they replaced but First's rubbish is much worse than Virgin's rubbish.

  • rate this
    +1

    Comment number 98.

    86/94.

    Sources please?

    In the meantime, here is evidence of the cautious growth figures projected by HS2:

    http://www.appghsr.co.uk/upload/transcript.pdf

    Page 12, paragraph 3.

  • rate this
    +1

    Comment number 97.

    85. Realist
    You subsidise the railways while they are privately run as well, but the money goes to Mr Branson et al while the fairs go up.
    Besides, a properly run rail system could take unnecessary traffic off the roads, thus reduce congestion and benefit everyone.

  • rate this
    +3

    Comment number 96.

    In private sector for such a blunder one will get a straight sack. Will the minister who was over seeing the whole process and civil servants get a sack as well I doubt instead they will get a knighthood sometime later for their tremendous services to the country.

  • rate this
    0

    Comment number 95.

    Virgin on the ridiculous.

    Looking forward to the completion of Virgins cradle to grave experience. Franchised of course.

  • rate this
    +1

    Comment number 94.

    72. Chris Neville-Smith
    HS2 assumes passenger growth of 2.5% per year until 2040. Considering passenger growth is currently 6% per annum, that is a cautious assumption.
    ==
    Price is the key.

    Currently occupancy of 1st class carriages must be less than 10%.

    If its very expensive we will have spent a fortune shipping a handful of rich businessman, saving them 20 minutes. Buy 'em a laptop instead.

  • rate this
    +1

    Comment number 93.

    Renationalisation would not be expensive: all they have to do is insist on collecting the full contributions due from the train operating companies and cut the subsidies. These private companies are subsidised much more heavily than British Rail ever was: that money just goes to shareholders in the form of dividends: that is obscene. Shareholders no longer fund business but parasitise it.

  • rate this
    +1

    Comment number 92.

    Didn't Branston offer to run the line for free?

  • rate this
    -37

    Comment number 91.

    Bad decision. Why does the Civil Service and Ministers have so many problems dealing with public sector contracts? I can't afford to travel on Virgin Trains. Their fares are outrageous, and days out don't happen because they have a monopoly on routes. While FGW aren't that great, it would have dealt a mortal blow to VTs pricing.

  • rate this
    +3

    Comment number 90.

    UK railways are still a cash cow.
    Either privatise fully, or nationalise, there is NO best of both worlds, especially for taxpayers & users.

    Oversight of service quality & competance is diabolical.

    Some track maintenance companys are negligently/criminally managed, ghost workers, ghost jobs & false time sheets are pandemic, but hey, who gives a monkeys, its ONLY taxpayers/commuters money!

  • rate this
    +1

    Comment number 89.

    I remember Nationalised railways very well. Comfortable waiting rooms with roaring fires, plenty of platform seats, porters and friendly local ticket clerks, neatly kept gardens and fresh bright paintwork. Trains with adjustable windows, cosy compartments and real coffee. Travelling was a pleasure. Bring it all back. Freedom of movement should not be constrained by economics.

  • rate this
    +2

    Comment number 88.

    Branson had the guts to challenge the ineptitude of civil servants and the compliant and ignorant ministers. A faceless First Group would have been popping the champagne and spending their bonuses by now without a single concern for their customers.

    Maybe Richard Branson would like to challenge for another "franchise" in 23 months time - running the UK.

  • rate this
    +4

    Comment number 87.

    The only reason that this, and previous Governments, is trying to give away the WCML is that they have issues with Mr Branson and Virgin Brand.
    Virgin wanted to start up an alternative Lottery and everything was in place, by was turned down.
    Virgin wanted to buy Concorde off BA, but the Government would rather scrap it.
    Open for business Mr Osborne ? I think not.

  • rate this
    0

    Comment number 86.

    @72. Chris Neville-Smith

    Not in the HS2 roadshow booklet they gave me! But still, basing future growth projections on an exponential growth curve without understanding the underlying causes is primary school mathematics at best and just another demonstration of the numbers being made to fit the business case and not the reverse.

    If you need a visual example: http://xkcd.com/605/

  • rate this
    +12

    Comment number 85.

    The only way to have a rail network of international standards is to unfortunatly re-nationalise the system. You can't run the network to the standard users want and make a profit without increasing fares 3 fold, and the users don't want that. But then why should i as a taxpayer subsidise something that i very rarely use?

  • rate this
    +1

    Comment number 84.

    I find it odd - it is always the government in power that is blamed but very few think about who is behind this mess.

    The Civil Servants that messed up the calculations are the same people whether Tony Blair, 'Dave' or The Monster Raving Looney Party are in control.

    It is right that we find out what went wrong if only to stop it happening again.

    Renationalisation will be too costly now.

  • rate this
    +2

    Comment number 83.

    ....and if we hadn't all complained in the most vociferous manner possible this government would have gotten away with handing the franchise over to the highest bidder without any consideration of the quality level. Obviously no ministerial heads on the block when there's a legion of Civil Servants they can blame.

  • rate this
    0

    Comment number 82.

    27.Tio Terry
    18.SPEEDTHRILLS
    I think you may be confused, Cross Rail is still under construction.

    Indeed I was Tio. thanks; I meant of course Cross Country trains. My point about "solutions" is the expectation of a modern diesel electric design although it would still crawl from Penzance to Exeter.

  • rate this
    +15

    Comment number 81.

    Those responsible for wasting millions of public money will be suspended on full pay for the 23 months.of the enquiry then retire on full gold plated pension just before any action can be taken against them. Well that's how it normally goes is it not?

 

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