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 460.


    The USSR was ostracised from the global economy - thus it was funding starved.

    You cannot use the USSR (or N. Korea) as an example to base your fear of govt on because they were never given a chance to see if it would have worked.

    Due to the fears of people like you, Your argument is rendered moot.

    Europe has had state run services that worked fine - how did they do it?

  • rate this

    Comment number 459.

    Sombody was in charge and spent 40 million quid on a report that was wrong!
    Thank God Virgin can do basic maths
    Sack the lot and please do not pay them any fancy civil service pension,

  • rate this

    Comment number 458.

    Ref 443, 444
    OK Trout Mask Replica, fess up.
    Just how do you get sequential HYS entries when we mere mortals have to wait 10 minutes each time.
    You must work in the public sector!

    448 Network Rail was a political construct designed to wipe out Railtrack after some fatal accidents (conveniently forgetting that the only year of the century without rail fatalities was also on Railtrack's watch)

  • rate this

    Comment number 457.

    Civil Servants have been cut massively, pay reduced in real terms, conditions stripped by Maude and now blamed for Govt policy and corporations like Virgin having too much power. This govt claims to reduce democracy and increase delegation/accountability. They're increasing beaurocracy and reducing delegation. It's a blame game and ministerial PR stunt and we're not falling for it any longer!

  • rate this

    Comment number 456.


    "CEO got a right pasting in the Commons Select Committee."

    lol quite funny.

    A 57 million management fee right pasting.

  • rate this

    Comment number 455.

    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".
    No it's not, it's straightforward. The DfT made it complex.
    From my understanding, they forgot to factor VAT over the life of the contract.!!
    Yes, a large amount of £, but a schoolboy(girl) error

  • rate this

    Comment number 454.

    Please why don't we remove these amature Government Ministers from the equation. Lets get real experts in charge of our railways (both financial and technical) and set a standard national charge per mile travelled throughout the UK network with radical new centralised administration for infrastructure planning and rail improvement. The only alternative is to Nationalise.

  • rate this

    Comment number 453.

    A law should be passed in order to prevent the Government and the public sector from meddling in the commercial world as every time that they do it costs the taxpayer a fortune.The public sector simply does not understand commerce which is why PFI is a disaster and why the drug companies,defence suppliers etc always make a fortune out of public sector procurement.

  • rate this

    Comment number 452.

    The railways are a good example of the new "commercial" model that now prevails - where all the risk and cost is with the Public sector (the taxpayer) and all the profit is with the Private sector. This same model is seen with nuclear power, private health, care homes and, the banking "industry". Virgin are there for easy money.

  • rate this

    Comment number 451.

    @443. Trout Mask Replica

    "You don't think Microsoft "stole" your hard earned cash to pay for badly designed, over priced operating system..."
    No I don't. Computers get faster, more powerful & cheaper every year. Competition is working great. History proves it. How many computers were in the USSR?

    What do you suggest is the answer to UK's rail woes? If you had total power, what would you do?

  • rate this

    Comment number 450.

    Re 440.
    Yeah. Olympics. G4S. A right mess. But what happened after? 2 top directors had to walk, the share price went down, and the CEO got a right pasting in the Commons Select Committee.
    Oh to have a similar demonstrable evidence of accountability from the civil service over the rail franchise fiasco.
    But no, it will all be hidden and the perpetrators will probably get promoted.

  • rate this

    Comment number 449.


    Just kidding, it doesn't work particularly well. The way the railways work needs to be changed into a system that makes more sense for both business and consumers.

    But letting the railways get dragged back into the 70's is not the right option.

  • rate this

    Comment number 448.

    #441. ichabod

    I was trying to give some balanced facts within the limitation of available characters. You are right, it is a limited "not for profit" company, better known as Railtrack

  • rate this

    Comment number 447.

    So we'll get a few senior civil servants gently moved sideways or allowed to retire early with their massive pensions & payoffs after blowing £40 million of taxpayers money when they ought to be on their way to jail. The Public Services need a manager & above total cleanout, as nearly every Government department has been found to be "not fit for purpose".

  • rate this

    Comment number 446.

    This is another example of the nanny state syndrome we live in.Millions of our taxes are spent on people who are paid huge salaries for jobs they cannot do.As the state grabs more powers we head for the banana republic status.Our system of government is still living in the last century.

  • rate this

    Comment number 445.

    @438. Trout
    Somalia is a Governmentphile's heaven: Domestically there's the Federal Government of Somalia, plus the 3 semi autonomous Somaliland, Puntland and Galmudug administrations = at least 3 Domestic Governments.
    Plus 5 from the international community intervening: The UN, USA, EU, BRICs & ANU.
    How many more do you want? How are their trains?

    What do u suggest then, eek, more Government?

  • rate this

    Comment number 444.


    You don't get Bastiat's argument: when private enterprise fails it's because of nasty governments and regulation. When governments succeed then private enterprise would have done it better, faster, cheaper (though existentially didn't).

  • rate this

    Comment number 443.

    " Bastiat
    But at least a private business owner can't steal your hard earned wages ...."

    You don't think Microsoft "stole" your hard earned cash to pay for badly designed, over priced operating system and office products with poor reliability most people had no choice in? A proven monopolist abusing their market dominance.

    And what gives you the idea I think bureaucrats are "beloved"?

  • rate this

    Comment number 442.

    343. "Virgin /stagecoach have taken WC to where it should have been in the 1980's 125mph running with tilt...as usual the RMT have to say nationalise etc....same old piffle....virgin should bid for east coast...they are experts on inter city now !"

    Had BR had not been privatised we'd have seen Intercity 250 in 1993. Which would have been a damn sight more comfortable than wretched pendolinos.

  • rate this

    Comment number 441.

    re 429. A rather strange argument if I may say so.
    Network Rail is....well exactly what is it exactly? It's not private that's for sure -. It's a sort of unaccountable not-for-profit public sector quango and we pay billions in subsidies to it.
    You can't blame the private sector for that one - but you are right about UK rail efficiency compared with other European countries


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