Government blasted over West Coast rail errors

26 February 2013
By Edward Gent
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Virgin lost out to rival transport company FirstGroup in the West Coast rail franchise process which was

Virgin lost out to rival transport company FirstGroup in the West Coast rail franchise process which was "littered with basic errors"

Civil servants were lambasted over the West Coast rail franchise fiasco, which will cost taxpayers "at least £50m".

There was a lack of leadership at the Department for Transport (DfT) and a failure to "get basic processes right" over the West Coast fiasco, the report from the House of Commons Public Accounts Committee said.

MPs said they were concerned that these basic mistakes could be repeated in future projects such as the London to Birmingham high-speed HS2 scheme and the London Thameslink project.

After DfT errors in the process had been identified, Transport Secretary Patrick McLoughlin scrapped the bidding, which had seen Virgin Trains lose out to rival transport company FirstGroup in the battle for a new, 13-year West Coast franchise.

Instead, Virgin is carrying on running the West Coast service until November 2014, with a new bidding process starting after that.

The report said the department failed to learn from mistakes made in previous projects and senior managers failed to apply common sense during the West Coast bidding process. They also said senior managers had "missed clear warning signs, including from the [rail] industry, that there were serious problems with the [bidding] competition".

The committee said: "We are astonished that there was no senior civil servant in the team despite the critical importance of this multi-billion-pound franchise."

The MPs added that they were also "astonished that the [DfT] Permanent Secretary [Philip Rutnam] did not have a detailed understanding and oversight of the [franchise] competition".

Launching the report, the committee's chairman Margaret Hodge said: "The DfT's complete lack of common sense in the way it ran the West Coast franchise competition has landed the taxpayer with a bill of £50m at the very least.

“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."

She added: "The franchising process was littered with basic errors. Senior management did not have proper oversight of the project. Cuts in staffing and in consultancy budgets contributed to a lack of key skills.

“We are astonished that the Permanent Secretary did not oversee the project because he was 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.

"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."

A DfT 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.”

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