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
    0

    Comment number 640.

    Four words sum this sorry saga up: "Jobs For The Boys"

  • rate this
    0

    Comment number 639.

    We have just spent £40m of our money and got nothing for it. Clearly, we have inadvertently authorised Whitehall to sanction this sort of fiasco. We need to remove that authority. Whitehall should stick to running public services with the money we give them, not assessing the risk of private enterprise. If we want a say in how railways are run, nationalise them, otherwise privatise and walk away.

  • rate this
    +1

    Comment number 638.

    So what's going on again. Government spending our money like water, wasting the cost of at least 3 new schools on a "mistake". Will heads toll? No. The Establishment, like murky water, will obscure and protect its own ineptitude and behaviour. We need to to be told, on a web site, what money the gov is getting from us what it is spending on and maybe asking US what we want OUR money spent on.

  • rate this
    +1

    Comment number 637.

    @597 Political
    I think it very unfair of you to compare schoolboys mentality with that of government ministers.
    Schoolboys, generally speaking, are far more intelligent than vacuous government ministers, and could probably do a much better job of running the country.

  • Comment number 636.

    All this user's posts have been removed.Why?

  • rate this
    +1

    Comment number 635.

    You can understand why people try and avoid paying tax as the state only ends up wasting a lot of it.

    Whether it is the taxpayer or the consumer, they always end up bailing out the incompetent in our society.

  • rate this
    +2

    Comment number 634.

    I'm sitting in a 2-year-old, hi-tech 7-storey bespoke building; which cost just over £100m. That's planning; design; construction; materials; associated costs, etc.

    The question we should really be asking, then; how the hell is it possible to spend "at least" £40m - so, probably getting towards half of what it cost to build that - on one single bidding process for a contract..?

    Anybody?

  • rate this
    -1

    Comment number 633.

    Labour have no right to criticise the Tories. Labour made so many policy errors, from immigration through to Iraq, welfare dependency and over-reliance on the City.
    The fact that Labour aren't doing even better in the polls than they are shows most people know this.
    But in all the Whitehall cock-ups, surely civil servants bear at least some of the blame.

  • rate this
    0

    Comment number 632.

    As was suggested in the HoC debate yesterday, surely now after this fiasco the model to follow is the state run east coast mainline, which has consistently been in profit since the department took over. The minister sneeringly dismissed 'nationalisation'. To my mind it would be significantly better than the stealth tax that is the privatised railways where our money goes to rail shareholders.

  • rate this
    +2

    Comment number 631.

    I am amazed that this can have cost 40 million.

    And how typical of the public sector that people can be suspended, no doubt on full pay, then just go straight back to work.

  • rate this
    +1

    Comment number 630.

    The Process for franchising was reviewed and changed by the previous Labour government follow the debacle that was East Coast franchise. The application of the process is the responsibility of the DofT bearing in mind how long the process takes I doubt it was started by the current government. However, it seems the application was flawed in that it was not consistently applied to both bidders.

  • rate this
    +1

    Comment number 629.

    626. steve

    Yes because Labour would have been much more prudent with our money.

    Oh, wait a minute...... Millennium Dome, ID Cards, NHS IT systems, Gold Reserves sale, Britains EU rebate, Sure Start, Iraq War, Aircraft carriers with no planes.................

    Hmm, perhaps a £40m cock-up isn't quite so bad then, if that's the worst they can do.

  • rate this
    +2

    Comment number 628.

    @622.ClaudeBalls
    618. JPublic
    Indeed so. Having had 13 years of "red" incompetence we have now had 2.5 years of "blue/yellow" incompetence. I'm staggered how many people think a swift return to "red" incompetence would improve things. Incompetence is colour-blind"

    Perfectly summed up. I gave up voting for the 3 main parties and look for an independent party. Sick of Labour and ConDem.

  • rate this
    0

    Comment number 627.

    Suggesting a minister takes responsibility for mistakes made by their department? How laughable! They will simply be moved into a different post and remain incompetent and surrounded by the likes of 'Humphry' and 'Bernard'. Watch 'Yes Minister / Prime Minister' and it's as valid today as it was 25 years ago - some things never change.

  • rate this
    0

    Comment number 626.

    Is anyone remotely surprised that this Government would cock up this deal.
    Run the Country I wouldn't trust them to run a bath.

  • rate this
    +1

    Comment number 625.

    re 482
    I've said it before, I'll say it again.
    When it's not your own money, you are less likely to look after it carefully.
    Taxpayers are frequently taken for a ride by public institutions spending our money like water with little or no real accountability.
    Have a look at the goings on at Brent Council this year if you want further proof.

  • rate this
    +2

    Comment number 624.

    £40 million is a drop in the ocean compared to what political leaders have fleeced from the country.
    Tony & cherrie feathered their nest through running the companies processing immigrants,
    Gordon Brown sold our gold reserves months before the price went up.
    In 10 -15 years time, we will start finding out where this gov't squirreled away our money, about the time when it will be to late .

  • rate this
    +1

    Comment number 623.

    Well we've got to nationalise something otherwise what are we paying Osborne all this extra tax for? Oh I remember, we live purely to service a gambling debt created by private sector banks...and its their Christmas bonus time too.

  • rate this
    +4

    Comment number 622.

    618. JPublic
    9 MINUTES AGO
    I feel certain our economic woes would not be half as bad if it were not for successive Gov't cock-ups over the decades.

    Indeed so. Having had 13 years of "red" incompetence we have now had 2.5 years of "blue/yellow" incompetence. I'm staggered how many people think a swift return to "red" incompetence would improve things. Incompetence is colour-blind.

  • rate this
    +4

    Comment number 621.

    601BadlyPackedKebab
    585vexed voter
    'This report has shown how incompetent the Tories really are.£40 million wasted'
    Agreed however don't for a minute think that Labour are any better-don't forget they blew £12bn on the failed NHScomputer system"

    And I'm sitting just yards away from one of the 8 regional fire control centres set up by Labour but they never worked and hugely over-spent.

 

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