Financial News

  • 10 December 2012, 5:58

West Coast Rail Debacle 'Cost Taxpayers 50m'

Taxpayers face a "significant" bill over the botched West Coast rail franchise process, a report from a government spending watchdog has said.

The Department for Transport's running of the West Coast bidding process lacked management oversight, with some staff "confused" by the system, the National Audit Office (NAO) report said.

The Government has already indicated that repaying bidding costs to the companies that competed for the franchise is likely to land taxpayers with a bill of around 40m.

Richard Branson's Virgin Trains has been handed the franchise for the next 23 months after the process that saw the route awarded to its rival FirstGroup was abandoned.

In its report, the NAO said staff and adviser costs, legal costs and money for the two reviews set up by the Government following abandonment of the West Coast bidding amounted to 8.9m.

NAO head Amyas Morse said: "Cancelling a major rail franchise competition at such a late stage is a clear sign of serious problems.

"The result is likely to be a significant cost to the taxpayer."

Commenting on the report, House of Commons Public Accounts Committee chairman Margaret Hodge said: "The DfT's handling of the West Coast franchise was a first-class fiasco."

Ms Hodge, Labour MP for Barking, said the DfT had "blundered into this major and complex competition for one of the biggest franchises in the country without even knowing how key parts of its policy were to be implemented".

She went on: "The department's conduct was characterised by haste, confusion and weak internal and external communication.

"However, the ultimate failure of this competition was sealed by a rich mix of the department's feeble and forever changing management and almost non-existent oversight."

Bob Crow, general secretary of the RMT transport union, said the final cost of the West Coast fiasco could be as high as 100m.

He said: "This cost will not be borne by the ministers responsible for this debacle.

"It will be carried yet again by the British people and will be paid for through cuts in investment and higher fares, with the train operating companies protected and cushioned in the same way as they have been since privatisation was first unleashed."

Michael Roberts, chief executive of the Association of Train Operating Companies, said: "The Government needs to grip the issues that led to the cancellation of the West Coast franchise competition.

"It must get the programme of franchising back on course and give passengers as well as train companies the confidence that new rail franchises will be awarded through a fair and robust process."

Transport Secretary Patrick McLoughlin said: "The NAO has made a number of recommendations that mirror many of the findings of the Laidlaw Inquiry in terms of the work we need to do to strengthen our organisation and the structures within it.

"I am pleased to say that we are already taking swift action on this front and I believe the plans we are putting in place to ensure future franchise competitions are conducted on the basis of sound planning, the rigorous identification and oversight of risk, and the right quality assurance, will prevent a repeat of these lamentable failures."

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