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
    0

    Comment number 240.

    Transport Secretary Patrick McLoughlin also announced a new hourly service between Glasgow and London, adding: "We are determined to ensure not only that passengers continue to experience the same levels of service they have in the past, but that services improve."

    ...At no extra cost in fares hopefully??

  • rate this
    0

    Comment number 239.

  • rate this
    +2

    Comment number 238.

    RichardH - under the old British Rail, starved of investment, we invented the tilting trains. Our nice new Pendolinos are built using British technology - in Italy.

    How is it possibly more efficient to have one company own the trains, one the track and another to operate the trains on the track? The whole thing is ludicrous.

  • rate this
    +2

    Comment number 237.

    Save the planet- take the train – effect – more demand leading to price increases- service unimproved

    Save the planet drive less – effect - Less road tax looking to compensate for it by taxing existing drivers more .

    Commuters are getting shafted regardless.

    How is this supposed to contribute to growth in the economy when transport costs underpin almost all other product costs?

  • rate this
    0

    Comment number 236.

    Expensive tickets?, I can get to London return from Glasgow for less than £100 and into the centre of London quicker than the airlines can get me there.If you talk about expensive tickets you are obviously using the service at the wrong time of day or your commute is too long, that's a matter of choice. The service is great, never had a problem. Keep First well out of the way.

  • rate this
    0

    Comment number 235.

    Well somebody has to run it in the meanwhile.

    The big issue here though is when will the Govt. realise that top notch Procurement Officials cost money & that you get monkeys if you pay peanuts.....??????

  • rate this
    +1

    Comment number 234.

    The government has made a very bad decision here. They should have temporarily taken the West Coast franchise into public ownership until the competition can be re-run in a fair, open and transparent way.

    Virgin lost the original bid and now have as much right to run the franchise as anyone else. And the government are opening themselves up to the possibility of yet more legal challenges.

  • rate this
    +2

    Comment number 233.

    As Rail is now a private operation, make sure not a penny of public money is used for any proposed new line, like HS2. Clearly if it is a viable idea private operators will jump at the chance of taking all the financial risks. Otherwise people might say it is a rich mans folly, so they get a slightly faster commute to cheaper big homes area.

  • rate this
    +2

    Comment number 232.

    I can remember when BR ran the entire railway service. It wasn't the best service in the world, but it worked, most of the time. When I bought a ticket, I wasn't robbed. All the profits went into the this countries coffers.
    Unlike now. Mainly run by foreign companies, who charge us what want, and are paid millions in compensation by our government.
    Who said nationalisation didn't work?

  • rate this
    0

    Comment number 231.

    Virgin Travel Group Limited has £1.37bn in liabilities, made a profit of £390million, am I missing something. I refer to https://www.duedil.com/company/02274332/virgin-travel-group-limited

  • rate this
    +1

    Comment number 230.

    The whole tender process was a shambles, there is a distinctly fishy smell about it, the mistakes, irregularities and bias towards FirstGroup makes it reminiscent of a scene in Boardwalk Empire. Nucky Thompson eat your heart out.

    Richard Branson is a Legend.

  • rate this
    0

    Comment number 229.

    To all those advocating a renationalisation of the railways, be careful what you wish for.

    The nationalised company never made a profit - hence Beeching's axe.

    I used to work with the old British Rail - what a nightmare - overstaffed - under productive and living in a fanatasy world.

    More recently I have had to work with Network Rail and its just like going back in time.

  • rate this
    0

    Comment number 228.

    Although i'm pleased for Virgin because it appeared that there was some sort of conspiracy I have to say that it doesn't really affect my family and I because it's been a few years since us northerners have been able to afford to travel by train.
    All 4 people in my household work full time but luxuries like train travel aren't on the agenda thanks to miss-management by successive goverments.

  • rate this
    +1

    Comment number 227.

    This is virgin' on the ridiculous

  • rate this
    0

    Comment number 226.

    Re-nationalisation wouldn't guarantee real investment in the railway infrastructure to allow for better trains.

    The reason BT has so much competition was the advent of mobile phones and the internet and competitors able to easily create their own infrastructure (e.g. Virgin) to facilitate provision of these to customers.

    It was impractical for rail operators to do this, hence Railtrack was born.

  • rate this
    +2

    Comment number 225.

    Virgin Trains.
    Buy a rail franchise from the government.
    Taxpayers subsidise the loss making part (railway infrastructure).
    Overcharge your customers.
    Lose lose for the public.
    Win win for the owner.

    Virgin money.
    Buy a bank from the government (Northern Rock).
    Taxpayers keep the loss making part of the bank.
    Overcharge your customers.
    Lose lose for the public.
    Win win for the owner.

  • rate this
    +1

    Comment number 224.

    Silenytata's mentality is what's brought this country to its knees. He obviously has enough money to get on with his life. Millions in this country don't. Maybe he should think of them. Judging by his smug comment, I dare say he goes to the capital to sit in parliament.

  • rate this
    +1

    Comment number 223.

    Hooray! Good sense at last! If it isn't broke don't fix it!

  • rate this
    +1

    Comment number 222.

    I don't agree with everything Bob Crowe says but today's comments are spot on. Deus ex machina comes to mind. When I travelled north on Virgin, the service was terrible. Cramped conditions for long-distance commuters and passengers, an announcement the hot water machine to make tea was broken seconds after leaving London Euston and overprices sweets as the main food on offer for the long journey.

  • rate this
    +2

    Comment number 221.

    Easy to make a profit if there is no real competition and you operate a monoply service. Ideally should be nationalised and profits reinvested in timely upgrades of network and rolling stock so the country beneifts. Now why did that not work before?

 

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