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 440.

    426. Bastiat
    The guys who promised the Olympics, for £2.4bn, but in the end costs jumped to £9.3bn just by 2007:

    Not a great example to pick, was it? You can't possibly have already forgotten how the tories' favourite company, Group 4 Securicor (rebranded G4S so we'll forget about them losing all our prisoners) had to be bailed out by the army? Private enterprise at its best - not.

  • rate this

    Comment number 439.

    435. ichabod. Why should just the civil servants take the rap? The Minister(s) responsible for running the Department should resign after such an expensive blunder. They are supposed to be in charge after all.

  • rate this

    Comment number 438.

    You'd suggest anything as long as their was big Govt involvement."

    There you go again, totally misrepresenting an argument using reductio ad absurdum. I happen to think Somalia is the perfect model for you: a totally free market in what constitutes the rule of law, a free market of competing governments as you say. What could be more conducive to the libertarian nirvana you so admire?

  • rate this

    Comment number 437.

    @433. Trout

    "...The track record of private industry... isn't always exemplary".

    That may often be the case. But at least a private business owner can't steal your hard earned wages to pay for their poor decisions like your beloved bureaucrats can and do. No, bad business owners face bankruptcy court, assets liquidated and the better & more sound operators are rewarded with success.

  • rate this

    Comment number 436.

    If the people who have responsibility for handling the tender process are rubbish businessmen it rather follows that they will be easily stitched up by real businessmen. For further reference see council tenders.

  • rate this

    Comment number 435.

    Have the civil servants who made these mistakes been held to account?
    If so, in which way?
    If not, if it is as usual because of 'divided responsibilities' or 'lack of clarity' then go up the management chain to the person who thought such lack of accountability is acceptable and sack him/her without compensation on the grounds of gross misconduct.
    It won't happen of course.

  • rate this

    Comment number 434.

    "A mistake like this in the private sector would have cost the individuals their job."

    A fantasy, I work on huge private sector contracts. The more managers screw up and destroy profitability, the further they seem to climb.

    Vastly higher fares, worse service and safety, MASSIVELY higher subsidy than the old BR.

    And still idiots post on here as if this is a fantastic bargain to be lauded...

  • rate this

    Comment number 433.

    426. Bastiat

    So what. The track record of private industry in running projects to time, budget and quality isn't always exemplary. They happen to have the luxury of redefining success without having a expectant electorate looking at them. Examples: IBM S/360 ran over budget/schedule but became the most profitable product series ever. Each Windows release runs over budget and behind schedule.

  • rate this

    Comment number 432.

    @428. Trout

    You'd suggest anything as long as their was big Govt involvement. Next you'll be saying we should emulate Somalia's trains, a country with at least 8 governments: 3 Domestic Governments, plus 5 from the international community intervening: The UN, USA, EU, BRICs & ANU. Yuck.

    We need freedom from Govt, not more costly bureaucrats mismanaging contracts to their business pals from uni.

  • rate this

    Comment number 431.

    The minds of ministers were aiming for FirstGroup to take over regardless. And because there was a massive outcry and Virgin taking legal action, that the decision had to be stopped and hence the situation now. But what gets me is, why try and fix something that isn't broken? doing on the face of it a great job.Or it says the government are seeing what they can save regardless and thats dangerous

  • rate this

    Comment number 430.

    "If Dicky Branson makes a profit, good for him. Its called good business. Long live Virgin on the West Coast."

    Dicky's profits come entirely from the taxpayer despite a truly vast hike in fares over the time he's run the service, and with far fewer trains.

    Is that 'good business'? Because it sounds damn like the operation of a scam against the taxpaying public to me

    Pay your own fare do you?

  • rate this

    Comment number 429.

    Estimates are that public funding of railways is 3 times more than under BR in real terms.

    The Gov's figures show public funding has risen from £2.3bn in 93-4 to £5.2bn in 08-9 Funny kind of privatisation. Lots of evidence to show the money isn’t well spent. Office of Rail Reg compared Net Rail with its Euro counterparts, found it up to 40% less efficient in terms of how Net Rail spends money

  • rate this

    Comment number 428.


    N. Korea is a poor choice of example"

    Bastiat's standard strawman argument goes that if you don't agree with him on the merits of unfettered laissez faire economics (something no country in the world has had since before WW2), you must be an unreconstructed communist wanting the return of the USSR.

    A nonsense argument of course, but he keeps repeating it.

  • rate this

    Comment number 427.

    The ConLibs are flawed no wonder everything they do is!
    Cons, smoke and mirrors you name it -seeing is not believing....

  • rate this

    Comment number 426.

  • rate this

    Comment number 425.

    To all those on here moaning about how the civil servants got it wrong, should be sacked etc. etc. whatever happened to the idea that the person at the top i.e. the Minister, should be taking responsibility for their own Departments? I'm not defending well paid civil servants but the buck stops with the boss, surely?

  • rate this

    Comment number 424.

    @409.Bastiat - I'm sorry but I have no answer to your questions.

    But I do know that privatisation hasn't worked - because greed and profit has taken precedence over service.

    If privatisation were a viable option we would have a good rail system - we do not, we have one of the worst in Europe.

    It's funny how state run services in Europe have long been better than our private run ones.

  • rate this

    Comment number 423.

    reply to 401. DemonLee
    And then in the 70s the IC125 was built (the last new train we've had that's been any good) and InterCity made a profit. Also with all those spare coaches, which could be easily added to the end of any train, did we have hopelessly overcrowded two-carriage services stopping at stations capable of holding a dozen?

  • rate this

    Comment number 422.

    "The PCS union said it was "disgraceful, but not out of character for this Tory-led government, how quick ministers were to try to pin the blame on civil servants"."

    Hard to see who else to blame other than the civil servants who first devised the system and then failed to implement it properly.

  • rate this

    Comment number 421.

    A mistake like this in the private sector would have cost the individuals their job............Not civil servants though i'm sure.


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