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 280.

    Lots of folks on here wanting a better service (& why not), but re-nationalisation is not the answer. The country simply can't afford it. No use complaining that Germany (etc.) has better trains, they don't have an NHS to pay for. You want higher taxes? Vote for it.
    However, if the East Coast line wants to save money then drop the trolley service on peak time trains. Utterly pointless & annoying.

  • rate this

    Comment number 279.

    @ 91.Paulus60 - You complain about monopoly pricing, but Virgin doesnt have a monopoly on the West coast Euston to Scotland route - First run the Caledonian Sleeper train.

    By giving them WC Datytime, you'd be giving them a monopoly, not getting rid of one!

  • rate this

    Comment number 278.

    "Department for Transport civil servants, who were suspended after the scrapping of the bid, can now return to work."

    If this was in the private sector their feet would not touch the ground for the embarrassment & cost they have incurred due to their incompetence. Rail travel in this country is dirty unreliable expensive & shambolic. Considering this country invented railways it’s disgraceful.

  • rate this

    Comment number 277.

    This whole procedural farce is the perfect illustration, as if one was needed, as to why privatisation is a good thing.

    Sorry BBC - I know that's a view you don't like

  • rate this

    Comment number 276.

    Why are the ministers blaming the civil servants? Surely they should have been able to identify the flaws in the bidding process! Its these ministers who will go on to become chief execs or chairmen on the boards of major companies. For god's sake get someone who knows the strucure of the business to make the decisions, not some self serving clueless idiots

  • rate this

    Comment number 275.

    I would agree with the idea of nationalisation, except that Bob Crow would get his hands onto it and then we will see strikes/services get worse and costs shoot up. If people think its expensive now just wait until good old bob is demanding hefty pay rises, perks and a cut in hours.

  • rate this

    Comment number 274.

    This country is starting to look just as crooked as a tin pot dictatorship in Africa.

    On the one hand we have individuals who don't want to risk paying their full dues (taxes) in a country that enabled them to become very rich, thus they conveniently sell part of their stakes in a taxable businesses.

    And on the other hand we have our own government doing dodgy deals.

    You couldn't make it up!!

  • rate this

    Comment number 273.

    Privatisation = Profitisation! Bring back a national rail network.

  • rate this

    Comment number 272.

    This situation shows that the civil service struggles with just setting up and evaluating bids to run the rail service. How much worse would things be if the whole service was nationalised. I remember what the service used to be like when in public hands and can only imagine how badly it could be if back in that situation

  • rate this

    Comment number 271.

    Privatisation can work, but it needs to be strictly controlled both price and performance wise.
    -Pricing needs to be brought under control, for years we have been given above inflation rises, all in the name of investment, and yet I have seen none of it on South Eastern.
    -Profits should be capped with any extra being reinvested.
    -And performance tracking needs to be much better with heavy fines.

  • rate this

    Comment number 270.

    This whole scenario can't possibly be the fault of the government! I wonder who they try and pass the blame onto this time?

  • rate this

    Comment number 269.

    Just check your Hornby trainsets folks-you can't have competition on a railway line-trains can't overtake each other in the same way as buses.

  • rate this

    Comment number 268.

    I don't get the trains, how is it posible the trains are always packed to point their is little standing room, tickets have gone up 20 fold since I was a student (14years ago) and the government is still paying a large substity to operators but apparently no one is making money? hang on why would Richard make such a fuss loosing contract unless he was the one taking all the cash!

  • rate this

    Comment number 267.

    My good pal Mark has made repeated complaints about the buffet car on the West Coast being obver priced, under staffed and of a lesser quality than he is used to, so I am not at all suprised at these latest events, the railways need changing from top to bottom!

  • rate this

    Comment number 266.

    Why does the Civil Service and Ministers have so many problems dealing with public sector contracts?
    It is because the Ministers undermine their civil servants by ignoring advice and 'sacking' them for saying something they don't want to hear.

    What was the point of making redundant the staff whilst they were doing the analysis of the bids for the tender?

  • rate this

    Comment number 265.

    The Tories got caught transferring lucrative rail contracts from one monopolist to another one of their own choice.

    Now they've had to hand it back but they will try again when when the air has cleared and we've forgotten all about it.

  • rate this

    Comment number 264.

    I personally don't use the railways so I wouldn't know whether Virgin is better than FirstGroup or vice-versa. I also wouldn't know if today's privatised railways are better than the old nationalised ones.

    What I do know is you have to be rich to use them, which can't be right when they are classed as "public" transport.

  • rate this

    Comment number 263.

    The railways used to be affordable transport for the masses, yet these days it costs as much to travel by train as it does to travel by air, sometimes more...

  • rate this

    Comment number 262.

    Re-nationalise the railways, Bob Crow?
    Try North Korea.....

  • rate this

    Comment number 261.

    Having dealt with Firsts customer service and travelled on their trains, this is excellent news. Everytime I've travelled with Virgin its generally been great and when things have gone wrong (often as a result of track works/faults) their customer service has been excellent in resolving issues.


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