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| DfT flouted own rules in botched award of west coast franchise, says report | DfT flouted own rules in botched award of west coast franchise, says report |
| (7 days later) | |
| An under-resourced, overstretched Department for Transport breached its own guidelines, treated FirstGroup and Virgin differently and ploughed ahead with the award of the west coast main line franchise even after it became aware of problems that made a legal challenge likely, according to the first findings of a review into the fiasco that could cost taxpayers hundreds of millions of pounds. | An under-resourced, overstretched Department for Transport breached its own guidelines, treated FirstGroup and Virgin differently and ploughed ahead with the award of the west coast main line franchise even after it became aware of problems that made a legal challenge likely, according to the first findings of a review into the fiasco that could cost taxpayers hundreds of millions of pounds. |
| The interim report by Centrica boss Sam Laidlaw also warned that the factors he identified raise "significant issues about the ability of the DfT effectively to conduct rail franchise competitions". | The interim report by Centrica boss Sam Laidlaw also warned that the factors he identified raise "significant issues about the ability of the DfT effectively to conduct rail franchise competitions". |
| The transport secretary, Patrick McLoughlin, presented the findings to the House of Commons on Monday , pledging transparency on a debacle that saw the award to FirstGroup of one of Britain's most lucrative rail franchises, the London-Manchester-Glasgow service, overturned after Virgin sought a judicial review. | The transport secretary, Patrick McLoughlin, presented the findings to the House of Commons on Monday , pledging transparency on a debacle that saw the award to FirstGroup of one of Britain's most lucrative rail franchises, the London-Manchester-Glasgow service, overturned after Virgin sought a judicial review. |
| McLoughlin said the report made "uncomfortable reading", and while he did not want to prejudge the eventual conclusions, the interim report confirmed he was right to scrap the franchise competition. Labour said that while the government blamed officials for the crisis, it had "cabinet ministers' fingerprints all over it". | McLoughlin said the report made "uncomfortable reading", and while he did not want to prejudge the eventual conclusions, the interim report confirmed he was right to scrap the franchise competition. Labour said that while the government blamed officials for the crisis, it had "cabinet ministers' fingerprints all over it". |
| McLoughlin said problems identified so far by Laidlaw included a lack of transparency, inconsistencies in the treatment of the bidders and a failure to follow guidelines. There was also confirmation that there were technical flaws in the model used to calculate the amount of risk capital put forward. | McLoughlin said problems identified so far by Laidlaw included a lack of transparency, inconsistencies in the treatment of the bidders and a failure to follow guidelines. There was also confirmation that there were technical flaws in the model used to calculate the amount of risk capital put forward. |
| He said there was "good progress" in discussions with Virgin over the contract extension for the next 14 months while bids are sought for a two-year franchise. The government intends to run a new franchise competition for a long-term operator to run the service from 2015. | He said there was "good progress" in discussions with Virgin over the contract extension for the next 14 months while bids are sought for a two-year franchise. The government intends to run a new franchise competition for a long-term operator to run the service from 2015. |
| Labour's shadow transport secretary, Maria Eagle, accused ministers of trying to "shuffle off responsibility". She said: "However the secretary of state spins it, this is a franchise fiasco with not one but four cabinet ministers fingerprints all over it." | Labour's shadow transport secretary, Maria Eagle, accused ministers of trying to "shuffle off responsibility". She said: "However the secretary of state spins it, this is a franchise fiasco with not one but four cabinet ministers fingerprints all over it." |
| She said that Northern Ireland secretary Theresa Villiers had, as rail minister, drawn up the blueprint for longer franchises. McLoughlin's predecessors, Philip Hammond, now defence secretary, had cut key staff and Justine Greening, now at international development, decided to not hold an external audit and did not act on"warning after warning", she said.She added that McLoughlin had declared himself satisfied with the process before the select committee despite the evidence. | She said that Northern Ireland secretary Theresa Villiers had, as rail minister, drawn up the blueprint for longer franchises. McLoughlin's predecessors, Philip Hammond, now defence secretary, had cut key staff and Justine Greening, now at international development, decided to not hold an external audit and did not act on"warning after warning", she said.She added that McLoughlin had declared himself satisfied with the process before the select committee despite the evidence. |
| Laidlaw's report makes clear that coalition cost-cutting that "significantly reduced both head count and external consultants" drastically affected the department's ability to cope, with a workload that included decisions on high-speed rail, the Olympics, and key decisions on the future of the rail network. | Laidlaw's report makes clear that coalition cost-cutting that "significantly reduced both head count and external consultants" drastically affected the department's ability to cope, with a workload that included decisions on high-speed rail, the Olympics, and key decisions on the future of the rail network. |
| Alastair Darling, the former chancellor and transport secretary, said long franchises made economic forecasting difficult if not impossible, and urged McLoughlin to revert to shorter terms for train operators. McLoughlin said Richard Brown, the Eurostar chairman conducting a second review into the wider lessons for rail franchising, would consider it. | Alastair Darling, the former chancellor and transport secretary, said long franchises made economic forecasting difficult if not impossible, and urged McLoughlin to revert to shorter terms for train operators. McLoughlin said Richard Brown, the Eurostar chairman conducting a second review into the wider lessons for rail franchising, would consider it. |
| FirstGroup received repeated assurances that the government was set to sign until the cancellation on 3 October. A spokesperson said: "We are extremely disappointed and dissatisfied that, as a result of government's reversal of its decision, taxpayers and west coast passengers will not benefit from the better deal that our strong bid would have delivered." | FirstGroup received repeated assurances that the government was set to sign until the cancellation on 3 October. A spokesperson said: "We are extremely disappointed and dissatisfied that, as a result of government's reversal of its decision, taxpayers and west coast passengers will not benefit from the better deal that our strong bid would have delivered." |
| Virgin said that the report raised "serious concerns". A spokesman said: "Today's interim report shows just how important our calls were in the summer to find out what went on behind closed doors when deciding the future operator of the west coast franchise and that it should be opened up to proper detailed scrutiny. | Virgin said that the report raised "serious concerns". A spokesman said: "Today's interim report shows just how important our calls were in the summer to find out what went on behind closed doors when deciding the future operator of the west coast franchise and that it should be opened up to proper detailed scrutiny. |
| "As well as the technical errors the review has identified, it raises fundamental questions around why more favourable treatment was given to one bidder over another and the lack of a clear and consistent account of how and what decisions were made." | "As well as the technical errors the review has identified, it raises fundamental questions around why more favourable treatment was given to one bidder over another and the lack of a clear and consistent account of how and what decisions were made." |
| Louise Ellman, chair of the transport select committee, demanded why McLoughlin had suspended three civil servants if he was not prejudging the outcome of the Laidlaw review. | Louise Ellman, chair of the transport select committee, demanded why McLoughlin had suspended three civil servants if he was not prejudging the outcome of the Laidlaw review. |
| McLoughlin, who said the decision was taken by the permanent secretary, faces further questions over his handling of the aborted franchise award at a select committee hearing on Wednesday. | McLoughlin, who said the decision was taken by the permanent secretary, faces further questions over his handling of the aborted franchise award at a select committee hearing on Wednesday. |
| Laidlaw's final report is due by the end of November. The Brown review, which will identify the implications for rail policy, is expected by the start of 2013. | Laidlaw's final report is due by the end of November. The Brown review, which will identify the implications for rail policy, is expected by the start of 2013. |
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