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 260.

    Good news for the West Coast mainline. I travel from Newport (South Wales) to Bristol Temple Meads. I can get to work on time, but First Group can't even run a service from Portsmouth to Cardiff without people missing connections at newport. I wish Virgin would come and run the south wales, south west lines...

  • rate this

    Comment number 259.

    The Railway network has become a total joke. Time to renationalise it lock stock and Barrel. Far too many people sucking cash out under private ownership, and the fares are an insult to the poor users. Users Passengers is the correct term.
    Stuart Grant.

  • rate this

    Comment number 258.

    People are calling for re-nationalisation because users are paying MORE for their travel AND taxpayers are paying MORE for National Rail (maintenance)
    Which as far as I can see is the only result to rail privitisation (nationalisation= cost/profit to taxpayers VS privitisation = cost to taxpayers/ profit to companies)

  • rate this

    Comment number 257.

    If 'Dickie' makes a profit then surely he could do without the government subsidy that actually keeps the trains moving?
    Trains don't run late due to the massive slots they set themselves in the timetable.

  • rate this

    Comment number 256.

    It's not a battle! No need to concede.

    Yes, it is something I know quite a lot about. I've worked in the Safety Critical Systems industry for quite some time.

  • rate this

    Comment number 255.

    A victory for common sense over government corruption

    The Government couldn't spend one second in a courtroom because the process was so hooky

  • rate this

    Comment number 254.

    245. Tio Terry
    I understand your comments about costs but is it fair? on South West Trains you do not have the luxury of early booking discounts as you do on the services going up north or west!

  • rate this

    Comment number 253.

    249.dell1966 - "Have the civil servants who screwed it all up been disciplined ?......."

    I expect they have just been sent back to their day jobs that were employed to do in the first place....

    ....they should never have been asked to handle multi million £ procurement contracts that were not in their job description....the Govt should have got proper procurement experts in for that....

  • rate this

    Comment number 252.


    Virgin and their bearded wonder are part of that.
    Self-serving orifices.

  • rate this

    Comment number 251.

    It's a good decision from govt and I had expected virgin trains to run minimum of 5 yrs. I regularly travel in virgin trains and I love the journey...
    I was only bit disppointing with high fare at peak hours. I travelled several times in FGW, they have old trains and poor service...

  • rate this

    Comment number 250.

    I don't think it matters who runs the railway- it will still be creaking at the seams, dirty, crowded, overpriced, unreliable. A freind of mine has been repeatedly turned down for jobs in London because of the reliability and cost of the railway. The west coast line is better than most but if green transport is the future then massive government investment and subsidy is needed.

  • rate this

    Comment number 249.

    Have the civil servants who screwed it all up been disciplined ? Or as I imagine will still be receiving their bonus payment for failure.
    Private sector worker.

  • rate this

    Comment number 248.

    Fantastic news! I frequently use Virgin Trains from Birmingham to London and after a three hour journey from Aberystwyth, an hour long journey, flying across the country is brilliant and travelling at off-peak, is an affordable sum, especially for a student!

    However, the government must reassess and improve the trains in all of Wales, not jut to Holyhead! They're abysmal! Late and too long!

  • rate this

    Comment number 247.

    If I was Richard Branson, I'd tell the Dept. of Transport to "Get stuffed!" They cocked-up and needed someone to step in while they sorted out the mess. What use is two years to Virgin, he should have stuck out for five years, at least.

  • rate this

    Comment number 246.

    Rude staff, late trains and sky high prices, what a great deal for passengers. Sadly, the misery will continue. There is no competition on this line for ‘fast’ services between London, Competition should be on a level playing field. Everyone makes out of the railways EXCEPT passengers. Sadly us ‘mugs’ have no choice.

  • rate this

    Comment number 245.

    There's more to running a train service than running trains. If you want multiple operators who do you want to be responsible for manning stations? Ticket Inspection, ticket machine refilling/emptying, Car Parks etc, etc? You may end up with more staff and higher costs which will be passed on to travellers.

  • rate this

    Comment number 244.

    Expensive tickets?, I can get to London return from Glasgow for less than £100
    -The standard fare from Madrid to Barcelona (Further than London to Glasgow in trains nearly twice as fast) is 38 Euros.

    This doesn't involve booking 10 years in advance and travelling only on alternate leap years!

  • rate this

    Comment number 243.

    I travel on Virgin Trains regularly and find the prices are very reasonable if you are able/prepared to book in advance.

    Most of the train companies I have travelled with have had issues with overcrowding and delays but by far and away the worst one is Northern Rail. Maybe a new operator could be found for this franchise?

  • rate this

    Comment number 242.

    190.Tio Terry
    you seem really into this subject - I concede :)

  • rate this

    Comment number 241.

    The problem is there is no competition on almost all the routes, for example, on the South West Trains network you only have one operator and no choice or competition. Common sense tells you that is blatantly unfair practise! Either nationalise the trains or get competition going! Maybe as passengers that is what we should do, set up our own 'national' train service, run by us for us!


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