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 220.

    let's be pragmatic, not ideological: privatisation works when a competitive market can be created like in the case of BT.

    -Can you think of any other examples when it's worked?

    I can't

  • rate this

    Comment number 219.

    Nationalisation is good in this instance, as all railway companies have monopolies on their respective lines.

    However, nationalisation is dependent on it being run by people with years of experience in the industry, not by the likes of Theresa Villiers and Simon Burns, who have degrees in law and modern history respectively and have probably never set foot on a train in their lives.

  • rate this

    Comment number 218.

    Two words: "Thank God!"

  • rate this

    Comment number 217.

    The sooner this can get cleared up and the franchise given to First Group the better. First put forward a better bid than Virgin and I'm confident First will win again on the second round of bidding. The longer it is delayed the longer the longer it will be before passengers start to see improvements.

  • rate this

    Comment number 216.

    139. Chris Neville-Smith

    I have an old copy of the documentation from the Ruislip HS2 show from May 2011. Reads differently.

    If they've revised their numbers and still say it's going to be profitable we should be concerned because it appears that people in charge of 'investigating' these project's viability have an agenda of making the numbers fit their needs.

    The WCML should be a wakeup call.

  • rate this

    Comment number 215.

    General Election !

    We must have a proper government elected by electorate & not this self appointed rig up of Tories & Lib Dems

    This cosy insider arrangemant has allowed total incompetents into responsible jobs and with such dire results. This current crop must be urgently replaced.

    General election & now!

    Otherwise I suggest we need to get our sticks out & to do some chasing?

  • rate this

    Comment number 214.

    Paulus60 - all train fares are too expensive, but Virgin are not as bad as many and offer an excellent service, as you'll see from the countless comments below. More power to Richard Branson, I say!

  • rate this

    Comment number 213.

    Virgin Trains, aka one of the only trustworthy rail companies in the entire country. Glad to see they've got the line instead of the previous shower of corrupt idiots.

  • rate this

    Comment number 212.

    Clearly no one remembers the 'Golden Days' of BR, Broken Rail.
    When I was faced with with a two hour delay for the fourth day in the week. I had enough. I went to the station master's office and warned him I would use a very rude word.
    He was shocked rigid .I went to work in Japan where the trains work rather than breaking down.
    We just can't run railways that work.

  • rate this

    Comment number 211.

    You can always tell when we have a useless & corrupt government because we get an endless stream of 'inquiries' that take forever, cost a fortune & solve nothing!

  • rate this

    Comment number 210.

    Privatising the rail network did get more money into it for new rolling stock. This is the only good thing about.it. Under BR, most, if not all rolling stock was made in the UK = jobs. The costs of tickets were cheaper too. From a customer viewpoint, renationalisation is preferable to franchise, due it being a service provider, not a profit machine.

  • rate this

    Comment number 209.

    1st, split up public transport MONOPOLY companys
    Not many years ago, there used to be significant price competition difference between coach & train travel. Now the major route coach companys are ALL owned by train operators & there is NO price competition, except for the odd rare offpeak journeys/times that few need/want/use

    UK public transport = MONOPOLY & NO COMPETITION as evident in PRICES

  • rate this

    Comment number 208.

    Anything that is procured by government will be overpriced and late. This is not necessarily due to the suppliers, but the appalling inefficiency of the process and constant meddling with requirements after contract award. Bulk buying of computers at around £500, on sale in Currys at £250. If the defence department had said. "That's the design. build it" we would have had our carriers now

  • rate this

    Comment number 207.

    all i ever seem to hear is that there will be an enquiry into something that has been cocked-up - there must be scores of them at any given time due to incompetence and/or skullduggery

  • rate this

    Comment number 206.

    @199.Captain Finch
    Labour had 13 years to sort out this mess but but chose to do nothing instead"

    That is not true - Labour dug the UK into a big black hole and now sit in opposition avoiding to take responsibilty for it but vying to get back into power at all cost.

    And yet their are people reading this who are hardened Labour voters who also do not accept the mess as Labours fault.

  • rate this

    Comment number 205.

    #182 I think you are being unfair to Phillip Hammond; if I am right he has not been in the transport job very long, and has not yet had enough time to make a complete hash of the transport infrastructure. After all, it took him 18-24 months to create the fiasco of NHS privatisation, so he still has plenty of time to screw up on George's 500m - 1bn roads budget.

  • rate this

    Comment number 204.

    I'm not sure why they are keeping the names of those responsible under wraps? Surely it is more in the public interest than, say, Jimmy Carr's tax arrangements?

    I have yet to see any evidence of competence on the Tories part so far. Every day there seems to be a torrent of embarrasments and debacles for them.

    Put yourself out of misery and hold a general election. I'll be voting independent.

  • rate this

    Comment number 203.

    Where are all those people who said on here that Richard Branson was just being a bad loser now?

    They're stood by the water cooler trying to convince everybody who still listens to them that "there is no smoke without fire" and that they are still right no matter what.

  • rate this

    Comment number 202.

    The bare faced grins of these fellows is mind boggling. George gives us a long list of disasters and punishments then smiles. Then Dave smiles??

    I suspect these right wing fellows are getting us just where they want us and that was the naughty plan all along, and the half wit Lib Dems enabling them to do it

    Nick & Lib Dems should pull out now if they had any iota of morality??

  • rate this

    Comment number 201.

    Just now
    I am wondering if the same faulty algorithms were used for HS2
    Having been part of a very large DWP tender/bid process where they kept changing the spreadsheets wasting many, many months of work, only to then change it again on the day of submission.!!!!

    “Problems cannot be solved by the same level of thinking that created them.”


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