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 300.

    The truth is the public would be shocked at the extent of the incompetence of the civil service. I worked for over twenty years in the railway industry latterly in a civil service department and was recently retired early when my area of work became managed by "experts" with absolutely no experience of the industry they are managing. There is no commercial savvy and thats things go bad.

  • rate this

    Comment number 299.

    290. There was a deliberate lack of investment in the railways by the tory government at the time prior to privitisation. We were told it had to pay its own way and not be subsidised by taxpayers. Now it is in private hands we are still subsiding the system and franchises are being awarded to bidders who have to pay shareholders dividends, as well as covering costs.

    Re-nationalise now.

  • rate this

    Comment number 298.

    [Transport Secretary Patrick McLoughlin] said there was a "damning failure" by the Department for Transport, which had to be put right. The report had found "serious problems" and "unacceptable flaws".

    So heads will roll for this £40m fiasco, won't they?


    [Naming names] "has been left to another inquiry, which has been completed, but will not be made public." BBC

    Presumably not!


  • rate this

    Comment number 297.

    Cash starved BR cost less in real terms to run than the current "Privatized " but publicly funded train operating companies and proved what could be achieved when properly funded by the creation of Network Southeast and the referb' of the Aylesbury - Marylebone route (now Chiltern Railways).
    BR may have been percieved as somthing of a national joke but the current set up is a national disgrace.

  • rate this

    Comment number 296.

    I'm convinced that the government were more culpable than this report is letting on. That applicants were not treated "equally" speaks for itself. But, why is Bob Crow denigrating Virgin? He is right about the government's ineptitude (and corruption), however in comparison to FGW's franchises, they are hardly a monopoly. In any case, their service is second to none; prompt, efficient and helpful.

  • rate this

    Comment number 295.

    Nationalisation would bring benefits. BR was grossly underfunded and provided a good service. The private companies get more public money than BR ever got. At least the money would not go to shareholders.

  • rate this

    Comment number 294.

    The Department for Transport was forced to scrap the original bid to run trains between London, Manchester and Glasgow because of the miscalculations. Three officials are still suspended"

    Does George Osborne get suspended for his miscalculations?

  • rate this

    Comment number 293.

    Yet another department with 'Not fit for purpose' attached to itself. I keep asking myself is it because over the last ten odd years, protocol and rules have lasped into 'lets do our own thing' within the civil service and nobody will know any difference, or is it a case lets kill the coalition from within.

  • rate this

    Comment number 292.

    I have now spoken to Mark as a follow up from my comment of 267 and his complaint relates mainly to the quanitity of the food and also the complete lack of Parmo's on the menu despite his repeated requests.
    He claims "the buffet car represents everything that is wrong with railways in this country"

    My message to Mr Branson would be give your customers the parmo and prices that they want!

  • rate this

    Comment number 291.

    You can't privatise a railway, it just doesn't work.
    Big state bureaucracies are problematic, but they do work.

  • rate this

    Comment number 290.

    No doubt many consider peak time fares to be too high but if you book ahead and are flexible with the time you travel Virgin have some very attractive fares. I remember the time when railways were nationalised and there was little money for investment and it's strange that some blame the Government for the bid problems but also want them to run the railways!

  • rate this

    Comment number 289.

    If Dicky Branson makes a profit, good for him. Its called good business."

    But he isn't running a business and it doesn't, in the real world, make a profit- without subsidy he'd be bust. The tax pater is just giving money to Virgin shareholders.- it's no more than a government department dressed up as a private business.

  • Comment number 288.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 287.

    Maybe we should start paying our polititians on a performance basis just they are expecting our teachers to do.

    Then we can can do the same to bankers who fail at their job and still get millions in bonuses.

  • rate this

    Comment number 286.

    24. paulthebadger

    .....Look to Germany and Holland to see how to run a train service and if we cannot replicate it, ask one of them to run it for us.

    They already do run our railways. DB (German) operate a freight franchise, Crosscountry and Arriva Wales and West franchises. Abeilio (Dutch) operate the Northern and Mersyrail franchises, not to mention bidding for the westcoast franchise.

  • rate this

    Comment number 285.

    The frightening thing is that 2 transport secretaries signed off on this deal and without the protest by Virgin and Public this would have gone through despite the financial irregularities.

    I would expect more criticism of the 2 transport secretaries for trying to force this through in the summer recess but all 3 get are the heads of 3 nameless civil servants.

  • rate this

    Comment number 284.

    I have never agreed with Bob Crow over anything in the past, but national infrastructure needs to be run on a not-for-profit basis. This probably means Nationalisation.

  • rate this

    Comment number 283.

    Nationalisation would be good if the government was capable of running anything competantly, but they're not, whatever colour they are, but then they couldn't do worse than the monopolies we have now, and the one thing that nationalisation might achieve is accountability via the ballot box. I use FGW and it's worse than British Rail was, for reliability, quality, and price...

  • rate this

    Comment number 282.

    Stop blaming the givt when it was the incompetent unionised civil servants making the mistakes and misinforming ministers.
    & renationalise!!!!! Bob Crow would grind the country to a halt at every oppurtunity, check your history, it's part of the reason for privatisation.

  • rate this

    Comment number 281.

    Private companies have to make a profit otherwise no one will invest in them. The problem is their is no competition, We should implement a system like the airlines where companies buy a slot from A->B that way we would get lower fares + better service as we could vote with our feet between operators on the same route. People may say to complex, I the airline industry seem to have it mastered!


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