West Coast Main Line franchise fiasco 'to cost at least £50m'

A Virgin train Virgin Trains has run the West Coast Main Line service since 1997

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A "complete lack of common sense" in the Department for Transport's handling of the West Coast Main Line franchise deal will cost taxpayers "£50m at the very least", MPs have said.

The cost might be "very much larger", the Public Accounts Committee warned.

The committee accused the department of making "fundamental errors" and failing to learn from "previous disasters".

A spokesman said the department had taken steps to ensure there could be no repeat of the failure.

But Labour accused ministers of "hiding behind their civil servants".

Explaining why the total cost might prove to be higher than previous estimates, Labour MP Margaret Hodge, who chairs the committee, said: "If you factor in the cost of delays to investment on the line, and the potential knock-on effect on other franchise competitions, then the final cost to the taxpayer will be very much larger."


Unveiling her committee's latest report, Mrs Hodge said: "The franchising process was littered with basic errors. The department yet again failed to learn from previous disasters, like the Metronet contract. It failed to heed advice from its lawyers. It failed to respond appropriately to early warning signs that things were going wrong.

"Senior management did not have proper oversight of the project. Cuts in staffing and in consultancy budgets contributed to a lack of key skills.

"The project suffered from a lack of leadership. There was no single person responsible from beginning to end and, therefore, no one who had to live with the consequences of bad policy decisions.

Start Quote

The department has... taken immediate steps by bringing together all rail activity under a single director general and recruiting a senior director to lead the franchising programme”

End Quote Department for Transport spokesman

"For three months, there was no single person in charge at all. Not only that, there was no senior civil servant in the team responsible for the work, despite the critical importance of this multi-billion pound franchise."

The committee had been "astonished" that the Department for Transport's top civil servant had been "told he could not see all the information which might have enabled him to challenge the processes, although it was one of the most important tasks for which the department is responsible".


Mrs Hodge added: "Given that the department got it so wrong over this competition, we must feel concern over how properly it will handle future projects, including HS2 and Thameslink [rail routes]."

"The department needs to get its house in order and put basic principles and practices at the heart of what it does, with an appropriately qualified and senior person in charge of the project throughout and an accessible leadership team ready and willing to hear and act on warning signs."

In October, the government scrapped its decision to award the £5bn franchise to FirstGroup.

The mistakes in the West Coast process came to light after rival bidder Virgin Trains launched a legal challenge against the decision. Virgin will continue running the service until November 2014, when a new long-term franchise will begin.

In December, the National Audit Office calculated that there would be a "significant cost to the taxpayer" as a result of the fiasco.

It said costs for staff, advisers, lawyers and the two reviews into the fiasco added up to £8.9m, on top of the estimated £40m it will take to reimburse firms for the cost of their bids.

Bob Crow, the leader of the RMT union, which represents rail workers, called for wholesale renationalisation of the railways.

"The stench from the fall-out of the West Coast franchise continues to hang over Britain's transport industry as it becomes clearer with every examination that the ministers responsible for this shambles could not be trusted to run a whelk stall let alone multi-billion government contracts," he said.

'Strengthening oversight'

"Privatisation is a corrosive and expensive political project doomed to repeated and costly failure, twice on the East Coast and now on the West," he added.

"Fiddling with processes won't work. It's the whole, rotten policy that needs dumping with a return to public ownership."

But a Department for Transport spokesman said: "The independent Laidlaw inquiry published in December identified the unique and exceptional circumstances which led to failures in the West Coast franchising programme and crucially what steps the department should take to prevent this from happening again.

"The department has accepted all the recommendations and has taken immediate steps by bringing together all rail activity under a single director general and recruiting a senior director to lead the franchising programme, as well as improving internal governance and strengthening oversight and accountability.

"Not only will these reinforce the franchising process but will also protect rail infrastructure projects such as HS2 and the biggest programme of rail electrification."

Maria Eagle, the shadow transport secretary, called on Prime Minister David Cameron to "take responsibility for the rail franchising fiasco, instead of allowing ministers to hide behind their civil servants".

"The government must accept the finding of the Public Accounts Committee that it was the short-sighted decision by ministers to axe external audits of multi-billion pound contracts that ended up with at least £50m of taxpayers' money going down the drain," she added.

"It is a disgrace that every politician responsible for the bungled franchise deal has either remained in the cabinet or been promoted to it."

Richard Hebditch of Campaign for Better Transport, which fights for better public transport, said the report showed the biggest problem was the franchising system itself.

"Franchising needs to be completely reformed so that what counts are improvements to the service on offer, rather than complex calculations of profit and loss that don't stack up," he said.

West Coast Mainline map

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  • rate this

    Comment number 194.


    'Look at the Edinburgh tram fiasco.'

    One of my personal bug-bears. Anybody with an IQ higher than that of plankton could predict how that was going to turn out. Yet they ploughed ahead with it. Tearing up the roads for no good reason other than they fancied their own trainset.

    Already two existing train lines within 1/2 mile of the airport. Only needed a spur. Or a loop.


  • rate this

    Comment number 193.

    185 - stan howard .....the health service

    Apparantly, MP's are easy to operate on because they don't have any heart, brain or backbone!

  • rate this

    Comment number 192.

    Post 151. It's amazing how many people who slag off welfare costs suddenly go very quiet when THEY have a serious illness and an expensive ambulance turns up and they have a 'scandalously' expensive operation in a 'waste of taxpayers money' hospital and they then are too ill to return to work so receive benefits. Fingers crossed that you never need to use this 'welfare scandal'!

  • rate this

    Comment number 191.

    Justine Greening MP was the Minister responsible for this fiasco, at a cost of "at least £50 million" to the taxpayer. What happened to her? Cameron promotes her to the Cabinet and she receives a taxpayer funded pay rise.

    Nadine Dorries MP goes to Australia for a week, at no cost to the taxpayer. What happened to her? Cameron suspends her from the Parliamentary Conservative party.

    What a joke.

  • rate this

    Comment number 190.

    I am sick to death of MP's abusing tax payers money, 50 million wasted here, 100 million wasted there not fogetting the 12billion wasten on the NHS computer system that never was.
    Where is the accountability? Where is the fraud investigation? Where are the sackings?

    They are as absent as the tax they avoid.

  • rate this

    Comment number 189.

    @168 nczm

    They are not being paid peanuts though are they? and that is the problem. We are paying non professionals an absolute criminal amount of money to run and in some cases over see things that they in most cases don't know the first thing about nor understand or even care to learn about and understand. Look at the Edinburgh tram fiasco.

  • rate this

    Comment number 188.

    Why has the minister responsible not been sacked? She has just been moved into a 'safer' Dept. She appears to lack competence and should be removed from the government.

  • rate this

    Comment number 187.

    £50m is small change compared to the £12 billion wasted on the NHS computer scandal. Let's keep things in perspective.

    At least this money was probably spent in the UK rather than being outsourced to an IT hive in India.

  • rate this

    Comment number 186.

    163.Bob. "You English deserve Bob Crow and his policies."

    I say, steady on old chap. I know we're pretty ghastly, but surely even we don't deserve him.

  • rate this

    Comment number 185.

    Dont knock the health service, Tory brain adustment opperations are the only cure for future stability, having a dose of toxic dogma removed followed by a short convelescence in the real world is what is needed.

  • rate this

    Comment number 184.

    149. Wookie2012 said:-

    ...........Why are these useless monkeys exempt from the law? .......

    Answer:- Because these 'useless monkeys' make, and when it suits them, change the laws that make things 'criminal'. Although we are all supposed to be equal in the eyes of the law, the 'law' can be worded (or interpreted) in such a way as to make some more 'Equal' than others.

    Just wait for the flack!

  • Comment number 183.

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

  • rate this

    Comment number 182.

    @171. WhyDontYou

    He means we deserve it because we moan and moan about how our puppet government are destroying us but we just sit back and let them do it :-)

  • rate this

    Comment number 181.

    Never really understand why profit making companies get government subsidies, surely the railways should either be run not for profit or be entirely privately owned. The former should lead to a lack of corruption as companies aren't likely to pay people off for contracts and the latter there would be no need for corruption as there would be no need to go through the tender process in the 1st place

  • rate this

    Comment number 180.

    Of course no public sector salaried job will be lost nor pension affected regardless of what they do wrong.
    A disgruntled taxpayer.

  • rate this

    Comment number 179.

    // Big John the Red

    No lessons will be learnt as the initial terms of reference were compiled by dogma rather than common sense.

    Privatisation = cowboy’s charter!//

    BA is infinitely better than it was when it was nationalised, and crap though the current rail is, I wonder if you remember what BR was like....

  • rate this

    Comment number 178.

    Frankly the rail system should either be private (track, stations, trains, signals all owned by one company in one area) or public (best). The current system is a total and utter mess.
    The senior civil servants and the ministers that take the money for being 'in charge' should be made to pay the cost out of their own pocket. Then they might pay attention next time

  • rate this

    Comment number 177.

    160. UKStinks
    Where is the accountability? Where is the fraud investigation? Where are the sackings?
    Because MP's have scapegoats!

  • rate this

    Comment number 176.

    Who has lost their job over this? In private Industry if you lost £50million your feet would not touch the ground on the way to the exit door, but in the Civil Service,I would guess that not even a warning has been issued!

  • rate this

    Comment number 175.

    ah the wonders of goverment regulation .so expensive. taxpayers will always have to fund something they did not otherwise want


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