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| West Coast Main Line deal scrapped after contract flaws discovered | |
| (about 1 hour later) | |
| The decision to award the UK's multi-billion-pound West Coast Main Line rail franchise to FirstGroup has been scrapped by the government. | |
| Transport Secretary Patrick McLoughlin said it was "deeply regrettable" that mistakes had been made by staff within the Department for Transport. | |
| Two reviews have been ordered into what happened, and the process will be re-run. The estimated cost of the mistakes will be £40m, he said. | |
| FirstGroup said it was "disappointed". | |
| The company had beaten current operator Virgin Trains to win the 13-year franchise after a 15-month bidding process. | |
| The West Coast route serves 31 million passengers travelling between London, the West Midlands, the north-west of England, North Wales and the central belt of Scotland. | The West Coast route serves 31 million passengers travelling between London, the West Midlands, the north-west of England, North Wales and the central belt of Scotland. |
| Mr McLoughlin emphasised that neither company had done anything wrong during the process. The "fault lies wholly and squarely with the Department of Transport", he said. | |
| Writing on his blog, Virgin founder Sir Richard Branson welcomed the move, details of which emerged in the early hours on Wednesday, adding that he was hopeful ministers would "now accept that Virgin Trains should carry on running the West Coast Main Line". | |
| BBC transport correspondent Richard Westcott says the implications of the decision to scrap the deal go much further than just the West Coast Main Line. | BBC transport correspondent Richard Westcott says the implications of the decision to scrap the deal go much further than just the West Coast Main Line. |
| This dramatic, midnight admission by the government that it failed to judge the West Coast Main Line bid properly is deeply embarrassing. | This dramatic, midnight admission by the government that it failed to judge the West Coast Main Line bid properly is deeply embarrassing. |
| When the franchise was handed to First Group the then Transport Secretary Justine Greening insisted the government would push on with a process it insisted had been robust and fair - in the face of angry objections by Virgin, the Labour Party and the thousands of people who signed a petition calling for the bid to be reconsidered. | When the franchise was handed to First Group the then Transport Secretary Justine Greening insisted the government would push on with a process it insisted had been robust and fair - in the face of angry objections by Virgin, the Labour Party and the thousands of people who signed a petition calling for the bid to be reconsidered. |
| She lost her job in the reshuffle. The new Transport Secretary, Patrick McLoughlin, told the Commons as recently as 12 September he was satisfied all bids were considered fairly and with "due diligence". | She lost her job in the reshuffle. The new Transport Secretary, Patrick McLoughlin, told the Commons as recently as 12 September he was satisfied all bids were considered fairly and with "due diligence". |
| Now, the day before Virgin's High Court legal challenge was due to start, the Department of Transport has admitted to "completely unacceptable mistakes." | Now, the day before Virgin's High Court legal challenge was due to start, the Department of Transport has admitted to "completely unacceptable mistakes." |
| Its rail franchising policy is in chaos. | Its rail franchising policy is in chaos. |
| There were about 15 rail franchises due to be decided before the next general election and the whole franchising process could now be thrown into doubt, he adds. | There were about 15 rail franchises due to be decided before the next general election and the whole franchising process could now be thrown into doubt, he adds. |
| The August announcement that FirstGroup would take over train services on the line - one of Britain's busiest - in December had sparked a legal challenge from Virgin, which has run the franchise since 1997. | The August announcement that FirstGroup would take over train services on the line - one of Britain's busiest - in December had sparked a legal challenge from Virgin, which has run the franchise since 1997. |
| The Department for Transport said because of the decision to rerun the bidding process it would no longer be contesting the judicial review launched by Virgin Trains in the High Court. | The Department for Transport said because of the decision to rerun the bidding process it would no longer be contesting the judicial review launched by Virgin Trains in the High Court. |
| And it said an announcement would be made about the suspension of staff while investigations were carried out. | And it said an announcement would be made about the suspension of staff while investigations were carried out. |
| Mr McLoughlin, who became transport secretary just three weeks ago, described the mistakes made by his department as "deeply regrettable and completely unacceptable". | |
| He said: "A detailed examination by my officials into what happened has revealed these flaws, and means it is no longer acceptable to award a new franchise on the basis of the competition that was held. | He said: "A detailed examination by my officials into what happened has revealed these flaws, and means it is no longer acceptable to award a new franchise on the basis of the competition that was held. |
| "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." | "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." |
| He said one review would examine how the West Coast franchise competition went wrong, and what lessons could be learned. It would be headed by Sam Laidlaw, a non-executive director of the department, and is expected to report by the end of the month. | |
| The other review would look into the wider Department for Transport rail franchise programme, and be overseen by Eurostar chairman Richard Brown. His report is expected by the end of December. | |
| 'Frank announcement' | 'Frank announcement' |
| FirstGroup said that it had had "no indication" of any problems with the franchising process until it was contacted by the Department for Transport. | FirstGroup said that it had had "no indication" of any problems with the franchising process until it was contacted by the Department for Transport. |
| "We are extremely disappointed to learn this news, and await the outcome of the DfT's inquiries," the company said. | "We are extremely disappointed to learn this news, and await the outcome of the DfT's inquiries," the company 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." | "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." |
| In a statement, Virgin Trains welcomed what it described as the transport secretary's "frank announcement" that the contest was flawed. | In a statement, Virgin Trains welcomed what it described as the transport secretary's "frank announcement" that the contest was flawed. |
| It said: "We are ready to play a full part in assisting the review to help deliver a franchising system that better serves passengers, taxpayers and the interests of all bidders." | It said: "We are ready to play a full part in assisting the review to help deliver a franchising system that better serves passengers, taxpayers and the interests of all bidders." |
| Labour MP Louise Ellman, who is chairwoman of the Commons Transport Select Committee, described the development as "absolutely astonishing". | Labour MP Louise Ellman, who is chairwoman of the Commons Transport Select Committee, described the development as "absolutely astonishing". |
| She said: "I'm going to recall the secretary of state and the permanent secretary to the Transport Select Committee, to question them about just what has gone wrong. | She said: "I'm going to recall the secretary of state and the permanent secretary to the Transport Select Committee, to question them about just what has gone wrong. |
| "This is really a major issue and a major catastrophe for them." She said three other franchises had also been cancelled. | "This is really a major issue and a major catastrophe for them." She said three other franchises had also been cancelled. |
| After learning that his firm had lost the bid in August Sir Richard said he was convinced that civil servants had "got their maths wrong." | After learning that his firm had lost the bid in August Sir Richard said he was convinced that civil servants had "got their maths wrong." |
| He asked that the signing of the contract could be delayed so that the process could be reviewed. | He asked that the signing of the contract could be delayed so that the process could be reviewed. |
| But Justine Greening, who was Transport Secretary at the time, defended what she described as the "robustness of the process". | But Justine Greening, who was Transport Secretary at the time, defended what she described as the "robustness of the process". |
| In August, Labour had also called for a chance for MPs to review the process. | In August, Labour had also called for a chance for MPs to review the process. |
| Following the cancellation, shadow transport secretary Maria Eagle said: "The West Coast rail franchise fiasco has yet again exposed the shambolic incompetence of this Tory-led government. | Following the cancellation, shadow transport secretary Maria Eagle said: "The West Coast rail franchise fiasco has yet again exposed the shambolic incompetence of this Tory-led government. |
| "The government's belated admission that it ran a flawed tendering process will come as a surprise to no one." | "The government's belated admission that it ran a flawed tendering process will come as a surprise to no one." |
| She called for full details to be revealed and said Mr McLoughlin should "come clean on the full cost to taxpayers of this shambles". | She called for full details to be revealed and said Mr McLoughlin should "come clean on the full cost to taxpayers of this shambles". |