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Bid process flaws 'unacceptable'

An inquiry into the West Coast railway franchise fiasco has found "serious problems" and "unacceptable flaws", Transport Secretary Patrick McLoughlin admitted.

Businessman Sam Laidlaw was asked to investigate the bidding process which saw FirstGroup chosen to run trains on the line, before the deal was scrapped ahead of a High Court case launched by Sir Richard Branson's Virgin Rail, which lost the contract.

Mr McLoughlin told the Commons: "I do not hide from the seriousness of his (Mr Laidlaw's) findings; they make extremely uncomfortable reading for the department.

"They caused serious problems for the bidding firms, including FirstGroup, who were in no way at fault.

"They must and will be acted upon."

Labour said the report was "damning".

Mr McLoughlin announced earlier that Virgin would operate services on the London to Scotland route for another 23 months, until November 9 2014, after which the West Coast line will be let under a long-term franchise.

The Transport Secretary said Mr Laidlaw's investigation found Department for Transport (DfT) officials "wrongly calculated the amount of risk capital bidders would have to offer to guarantee their franchise proposals".

Mr McLoughlin added: "These incorrect figures varied in ways which were wrong.

"Significantly, he also states for the first time that ministers made the original provisional award without being told about the flaws and after being given inaccurate reports."

Three civil servants were suspended after the deal collapsed and Mr McLoughlin said "any specific personnel issues" were for the department's permanent secretary.

"This is an extremely serious issue for my department and the Civil Service, but I am determined we learn the lessons and get on with the job we are here to do," said the Conservative minister.

The botched franchise agreement will cost taxpayers at least 40 million, Mr McLoughlin said previously.

Shadow transport secretary Maria Eagle told MPs the final report was "damning" and attacked ministers for blaming officials.

She said: "For all the effort by the Government to pin the blame on just three civil servants in briefing after briefing, and to hide behind an internal (HR) human resources process - the results of which will never be made public - some things are very clear; it was decisions and failures by ministers that led to the collapse of rail franchising at huge cost to the taxpayer."

The DfT later confirmed the suspensions had been lifted.

Ms Eagle accused the Government of a "bizarre restructuring" of the department which left no-one in charge of rail.

Mr McLoughlin said the report disclosed "inaccurate" statements about the franchise bid were given to ministers, who had acted in "good faith" on the information they were given.

He said the Prime Minister had also asked questions about the process, but there was a "damning failure" to proved accurate answers.

The Transport Secretary said the department now had the HR report and the Permanent Secretary would be looking in to the future of the three civil servants who were initially suspended.

Labour MP Louise Ellman, chairman of the Commons Transport Select Committee, said the 40 million cost estimate was just the "first stage" of the costs incurred by the department.

In reply, Mr McLoughlin said there were not just lessons for ministers but for the "civil service as a whole".

Labour MP Sir Gerald Kaufman (Manchester Gorton) said the Transport Secretary was "doing his very best to clear up the awful mess" left by his predecessor Justine Greening.

He said while civil servants were the responsibility of the permanent secretary in the department, overall administration was down to Ms Greening at the time. He said it was "unacceptable" she remained in the Government, now as International Development Secretary.

Liberal Democrat MP Simon Wright (Norwich South) said he wanted to know what the Government was doing to ensure that "hands were held up" when mistakes were made.

In reply, Mr McLoughlin said he had admitted the mistake but added that he hoped he would not "have to do it too often".

Tory former Welsh Secretary Cheryl Gillan (Chesham and Amersham), who has opposed the High Speed 2 rail project, said the fiasco at the department meant civil servants could not be trusted to manage the project. HS2 was "poorly managed and ill-conceived" and should be "consigned to the wastepaper bin".

Meanwhile, Tory MP Philip Hollobone (Kettering) said he was concerned senior civil servants were not being held accountable.

He said: "Whilst Parliament holds ministers to account, who holds the Sir Humphreys to account?

"There is a stink about this process amongst the permanent secretariat in our civil service. What happened to the previous permanent secretary in the department? Is he or she still in the civil service? And is the present permanent secretary going to take any responsibility?"

Mr McLoughlin said there would be further reports into what happened.

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