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Wednesday, 22 October 2014

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West Coast Mainline rail franchise 'fiasco' to cost at least £49m

Transport chiefs have come in for heavy criticism after it emerged taxpayers face a “significant” bill over the West Coast rail franchise fiasco.

The Department for Transport’s (DfT) running of the West Coast bidding process lacked management oversight, with some staff “confused” by the system, according to a National Audit Office (NAO) report.

The Government has already indicated that repaying bidding costs to the companies competing for the franchise is likely to land taxpayers with a bill of about £40 million.

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: “Canceling 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.”

Virgin Trains will launch an improved service on the West Coast Mainline this week following the Government’s decision to extend its franchise.

The company will continue to run trains on the London-Glasgow route until at least November 2014.

FirstGroup had been due to take over on Monday but ministers cancelled the switch in October after “unacceptable mistakes” in the franchising process came to light.

The DfT will now restart the bidding.

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

She went on: “It has left the Government’s entire policy on rail franchising in disarray, as a further three competitions have had to be put on hold.

“The total cost to the taxpayer of putting it right is currently unknown but is likely to be significant.”

Ms Hodge 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 added that bidders were invited to tender before the department knew how it would calculate companies’ capital needs.

Ms Hodge went on: “The department’s conduct was characterised by haste, confusion and weak internal and external communication.”

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.”

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.”

Carlisle MP John Stevenson said he was “delighted” that the West Coast Mainline would stay with Virgin.

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