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Franchise fiasco report 'damning'

An independent report into the West Coast rail franchise fiasco found "serious problems" and "unacceptable flaws" in the bidding process, a minister has said.

Transport Secretary Patrick McLoughlin disclosed the contents of the study, which highlighted a series of errors by Department for Transport (DfT) officials in the handling of the franchise bid.

The report - produced by businessman Sam Laidlaw - found ministers were given "inaccurate reports" on which to base the ultimate award of a new 13-year West Coast franchise to transport company FirstGroup last August.

It was only when Sir Richard Branson, whose Virgin Trains' company had lost out to FirstGroup in the bidding, mounted a legal challenge to the decision that the flaws in the process were discovered.

Mr McLoughlin, who published the Laidlaw report on Thursday, scrapped the West Coast bidding competition in October in a move set to cost taxpayers at least 40 million.

Today, before the report was published, he announced Virgin would carry on running West Coast trains until November 2014 when a new long-term franchise would begin.

Although highlighting officials' shortcomings, Mr Laidlaw said there had been constant changes of permanent secretary at the DfT and "and the resources of the DfT were excessively stretched due to the Government's spending review and the competing pressures of other projects".

Three DfT civil servants were suspended after the scrapping of the franchise process. One of them, Kate Mingay, has mounted a legal challenge against the department.

On Thursday, it was announced that the three suspensions had been lifted.

In the Commons, Mr McLoughlin, who had initially defended the original FirstGroup decision when he succeeded Justine Greening at the DfT in September, told MPs that the report would make "uncomfortable reading for the department".

He stressed that ministers had made the original franchise award "without being told about the flaws and after being given inaccurate reports".

But shadow transport secretary Maria Eagle said it was "decisions and failures by ministers" that led to the collapse of the franchise.

And veteran Labour MP Sir Gerald Kaufman said it was "unacceptable" that Ms Greening, now International Development Secretary, was still in the Government.

Philip Hollobone, Conservative MP for Kettering, said there was "a stink about this process amongst the permanent secretariat in our civil service".

The 23-month temporary franchise - longer than the 9-13 months originally envisaged - has been sorted out in the nick of time, as Virgin's existing contract was due to expire on Sunday.

Sir Richard had branded the franchise process "insane" before mounting his legal challenge.

There had been rumours that the DfT had pursued an "anyone-but-Branson" policy in the bidding process.

The Dft said today the Laidlaw report has said there were inconsistencies in the way FirstGroup and Virgin had been treated but that the report had found there was no evidence of a culture of bias against Virgin.

Both Ms Eagle and House of Commons Transport Committee chairman Louise Ellman said the Laidlaw report was "damning".

Mr Laidlaw said his report had found "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".

The DfT's Permanent Secretary Philip Rutnam said: "There is no question that this has been a serious blow for the department and I am determined that we learn everything we can from this episode.

"We will implement all of Mr Laidlaw's recommendations, and go further, to ensure we have the right set of skills, support and training to ensure failures like this do not happen again."

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