West Coast Franchise Is Thrown Off Track
The West Coast Main Line contract has been cancelled because of mistakes by Government officials in a move that will cost the taxpayer £40m.
Transport Secretary Patrick McLoughlin has dramatically ripped up a deal that handed the responsibility for running one of Britain's busiest railways to FirstGroup.
In a major embarrassment for the Government, he conceded the U-turn was down to "deeply regrettable and completely unacceptable mistakes" in his own department.
Three officials from the Department for Transport (DfT) have now been suspended and two independent reviews into the competition process have been launched.
Labour leader Ed Miliband told Sky News that the development was "appalling" and a sign of more "incompetence" from the coalition, which he insisted had to "get a grip".
The flaws relate to how the level of risk in the different bids was evaluated before a final decision on which to adopt was made.
There were mistakes in the way inflation and passenger numbers were factored in, which then affected how much money bidders were asked to put up as a guarantee.
Virgin Trains boss Sir Richard Branson had been furious at losing out to FirstGroup, calling the decision "insane", and was seeking a judicial review.
But barely 24 hours before a High Court hearing in the case, he was called by Mr McLoughlin late on Tuesday to be told the contract was being scrapped.
Sir Richard told Sky News the process had been an "absolute fiasco" and said the company had always been confident it had right on its side.
"Everybody at Virgin Trains is delighted. The last thing we wanted to do was go to court," he said, speaking from the US.
"It has been four months of non-stop process for everybody at Virgin Trains but we are glad that right prevailed in the end."
The businessman, who stressed he did not want to apportion blame, said Virgin would probably bid again as long as it was confident the rules were fair.
The mistakes in Whitehall were only revealed because officials were gathering evidence for the court case, suggesting they may not have been uncovered for some time had there been no challenge.
DfT permanent secretary Philip Rutnam said: "The errors exposed by our investigation are deeply concerning. They show a lack of good process and a lack of proper quality assurance.
"I am determined to identify exactly what went wrong and why, and to put these things right so that we never find ourselves in this position again."
At the time FirstGroup was granted the franchise, then Transport Secretary Justine Greening described the bidding process as "robust" and "fair".
FirstGroup had been due to take over the running of the London to Scotland line on December 9 and run the service for at least 13 years.
The Government says it is "resolving urgently" what will happen now and attempted to reassure passengers.
Mr McLoughlin said: "West Coast passengers can rest assured that while we seek urgently†to resolve the future arrangements the trains that run now will continue to run,†with the same drivers, the same staff and timetables as planned.
"The tickets that people have booked will continue to be valid and passengers†will be able to make their journeys as planned."
The four companies who competed for the deal will have to their bid costs refunded and a review of how the process went wrong will report by the end of the month.
A second investigation into the wider rail franchise programme is due by the end of December.
The three other outstanding rail franchise competitions - Great Western, Essex Thameside and Thameslink - have been suspended while the probes are carried out.
FirstGroup, whose shares were down 18% at one point on Wednesday, said it had no clue there had been anything wrong with the process until it was contacted by the Government.
"We are extremely disappointed to learn this news and await the outcome of the DfT's inquiries," a spokesman said.
"The DfT has made it clear to us that we are in no way at fault, having followed the due process correctly. We submitted a strong bid, in good faith and in strict accordance with the DfT's terms."
Shadow transport secretary Maria Eagle called on Mr McLoughlin to reveal the full details about what happened and branded the situation a "shambles".
what do you think?
It was obvious that something was not right with this by the way the previous minister tried to rush the deal through before parliament returned. Yet another example of wrong doings or at the very least bad management.
its about time that someone has seen some sence and seen the light good bye first group nice try
Deeply flawed? The buck stops with the muppet who heads the dft.
Money talks, Politicians are like diapers, they need changing and often for the same reason !!.
Square pegs in round holes - that's what happens when you recruit staff into jobs using Competency Based selection processes rather than interview selection by expertise! When will the Civil Service realise that paper shufflers put onto a contracts/tendering course do not, overnight, become experts.
Contracts and tendering should be dealt with by experts, not civil servants. I saw it all to often where big companies ran riot because the staff in the civil service were given the job of viewing contracts without the knowledge or experience to deal with them. I don't blame the civil servants for this but the ministers for allowing it.
This has only come to light because someone with cloat, aka Richard Branson, challanged it. How many other dumb and damright stupid dicisions flowthrough the goverments hands unchallanged? quite a few i suspect, lets keep an eye on the ongoing process involving the merger of BAE.
Well said especially the bit about BAE.
'Flaws in the way the process was conducted'?? What does that mean?? The people behind this could not ADD UP - they failed to do their sums properly!! And they are left to run our country and our economy? This lot can not be trusted. It is time for Cameron,Clegg,Cable and the rest of the Cs and Ds and Es to go! They have failed in every test including basic maths.
Confirmation of incompetence.
You really couldn't make this up - how many more 'deeply regrettable and unacceptable mistakes' do we have to fork out for ? I'm no transport franchise specialist [and neither it seems are the DfT] but I know the smell of a rat was in the air the moment it was announced that the WCML franchise was going to First Group.
It was announced on the radio that the government is to pay forty million pounds of our money in compensation to the unsuccessful bidders for the franchise, utter madness.
So they have sums like that lying around, and they're still closing A+E departments?!
Thank goodness for that. Endured a nightmare journey with Worst Great Western yesterday.
The fat controller,can he sort it
Richard Branson love him or hate him he is again the peoples champion. Now I think there is a female MP who should consider her position along with an investigation into who was on the take in the public sector or are they that incompetent. Always did like a Virgin .............. train :-)
Is there anything this shambolic government can do right?!
Do you know my wonderful friends, everytime Blue side has come on recently, he has shone like a bright beacon lighting up those dark recesses of our thoughts. I'm also today with my great friend Mr Shakes, there needs to be some accountability here and someone to take responsibility. Let's look at Justine Greening who advised us that the process had been "robust" and "fair". I heard her say that with my own sweet ears. I hope tv cameras and mics are going to pointed at her and she is asked to qualify her remarks. Well done Richard. I hope you are feeling truly vindicated.