West Coast Main Line fiasco caused by 'major failures'
- 31 January 2013
- From the section Business
The fiasco over the collapse of the West Coast Main Line franchise deal was the result of "irresponsible decisions", an MPs' committee has said.
The transport committee blamed "major failures" at the Department for Transport (DfT) and the civil service.
But its report was not unanimous, with several committee members choosing not to blame ministers.
In October, the government scrapped its decision to award the £5bn franchise to FirstGroup.
The reversal will cost taxpayers almost £50m, it has been estimated.
"This episode revealed substantial problems of governance, assurance, policy and resources inside the Department for Transport," said Louise Ellman, chairwoman of the committee.
"Embarking on an ambitious - perhaps unachievable - reform of franchising, in haste, on the UK's most complex piece of railway, was an irresponsible decision for which ministers were ultimately responsible.
"This was compounded by major failures by civil servants, some of whom misled ministers."
A DfT spokesman responded: "Independent experts concluded the collapse of the West Coast franchise programme was caused by a number of failures including inadequate planning and weak governance structure, but not systematic failings in the department.
"The examination of emails from key officials found no evidence that this was anything other than simple human error.
"We are putting in place measures that will prevent this embarrassing episode from happening again."
Also on Thursday, the DfT announced what it would be doing about the processes of awarding three other franchises, which were put on hold after the problems emerged with the West Coast Main Line franchise.
The competition for the Great Western franchise, which connects London to Bristol and Cardiff, has been scrapped.
The department is in talks with the existing operator FirstGroup about extending its franchise for two years. It will announce what it plans to do in the longer term later this year.
The other two competitions - Essex Thameside and the combined Thameslink, Southern and Great Northern franchise - will resume their bidding processes, with revised invitations to tender being issued to the existing short-listed bidders in the summer.
The existing operators will have their contracts to run those franchises extended for no more than two years, in order to allow those processes to be completed.
The mistakes in the West Coast process came to light after rival bidder Virgin Trains launched a legal challenge against the decision. Virgin will continue running the service until November 2014, when a new long-term franchise will begin.
In December, the National Audit Office calculated a "significant cost to the taxpayer".
It said costs for staff, advisers, lawyers and the two reviews into the fiasco added up to £8.9m, on top of the estimated £40m it will take to reimburse firms for the cost of their bids.
But three members of the transport select committee - Karen Lumley, Karl McCartney, and Iain Stewart - said that they disagreed with the report, which was passed by a majority vote.
An independent report last year by Sam Laidlaw - chief executive of Centrica, the owner of British Gas - found there was a "damning failure" by the DfT that led to ministers - who had not been told about flaws in the bidding process - awarding the contract after being given inaccurate reports.
"We believe the evidence in the Laidlaw Report shows that ministers asked the right, penetrating questions during the process but were given inaccurate responses by officials," they said.
"We do not believe that it is was 'irresponsible' to run the new franchise process first on the WCML as the department has shown itself perfectly capable of managing other complex projects in this period," they added.
Three DfT civil servants, who were suspended after the scrapping of the bid, have returned to work, and one official has launched legal action against the department on the basis that her role in the process has been "inaccurately" portrayed.
In the report, Ms Ellman said: "Many of the problems with the franchise competition, detailed in the Laidlaw report, reflect very badly on civil servants at the DfT.
"However, ministers approved a complex - perhaps unworkable - franchising policy at the same time as overseeing major cuts to the department's resources. This was a recipe for failure which the DfT must learn from urgently."
She called on the DfT to explain why ministers and senior officials were "misled" about how subordinated loan facilities were calculated, if necessary after disciplinary proceedings against staff have concluded.
Ms Ellman's constituency on Merseyside is served by the rail line.
About 31 million passengers travel on the West Coast Main Line between London and Scotland every year.