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West Coast Mainline deal failure criticised West Coast Mainline deal failure criticised
(about 1 hour later)
  
A report into the collapse of the £5bn West Coast Mainline franchise deal has blamed a "damning failure" by the Department for Transport. A report into the collapse of the £5bn West Coast Mainline franchise deal has blamed a "damning failure" by the Department for Transport (DfT).
The Laidlaw report was published hours after the government announced Virgin Trains will run the service for another 23 months - until 9 November 2014.The Laidlaw report was published hours after the government announced Virgin Trains will run the service for another 23 months - until 9 November 2014.
First Group was initially told it had won the bid.First Group was initially told it had won the bid.
The tendering process was halted in October because of numerical mistakes - at a cost of at least £40m.The tendering process was halted in October because of numerical mistakes - at a cost of at least £40m.
Three senior civil servants at the Department for Transport, who were suspended after the scrapping of the bid, can now return to work. Three senior civil servants at the DfT, who were suspended after the scrapping of the bid, can now return to work.
Transport Secretary Patrick McLoughlin told MPs, in the Commons, that the independent report into the collapse of the tendering process for the West Coast mainline "made extremely uncomfortable reading" for his department. One of the officials, Kate Mingay, launched a legal action against the department last week, saying her role had been "inaccurately" portrayed.
The independent inquiry into the collapsed tendering process was led by Sam Laidlaw, chief executive of Centrica, the owner of British Gas.
He said on Thursday his report had revealed "a lack of transparency, inadequate planning and preparation, as well as a complex and confusing organisational structure with weak quality assurance and insufficient governance oversight".
'Inaccurate reports''Inaccurate reports'
He said there was a "damning failure" by the Department for Transport, which had to be put right. The report had found "serious problems" and "unacceptable flaws", he said. Transport Secretary Patrick McLoughlin, revealing the report's findings to MPs in the Commons, said it made "extremely uncomfortable reading" for his department.
But Mr McLoughlin insisted that ministers had been given inaccurate reports and they had awarded the contract without being told about flaws in the bidding process. He said there was a "damning failure" by the DfT which had to be put right. The report had found "serious problems" and "unacceptable flaws", he said.
The inquiry into the collapsed tendering process was led by Centrica chief executive Sam Laidlaw. But Mr McLoughlin cited Mr Laidlaw's findings that ministers had been given inaccurate reports and they had awarded the contract without being told about flaws in the bidding process.
The transport secretary said Mr Laidlaw's investigation found Department for Transport officials "wrongly calculated the amount of risk capital bidders would have to offer to guarantee their franchise proposals". The transport secretary said the investigation by Mr Laidlaw - who will give evidence to the House of Commons Transport Select Committee on 18 December - found department officials "wrongly calculated the amount of risk capital bidders would have to offer to guarantee their franchise proposals".
"These incorrect figures varied in ways which were wrong," he said."These incorrect figures varied in ways which were wrong," he said.
"This is an extremely serious issue for my department and the Civil Service, but I am determined we learn the lessons and get on with the job we are here to do."
Mr Laidlaw's initial findings, revealed in October, talked of officials not following their own guidelines, not treating the bidders equally, failing to include inflation in their figures and ignoring warnings of possible problems months before the deal capsized.Mr Laidlaw's initial findings, revealed in October, talked of officials not following their own guidelines, not treating the bidders equally, failing to include inflation in their figures and ignoring warnings of possible problems months before the deal capsized.
BBC transport correspondent Richard Westcott said Mr Laidlaw's final report had not named names. BBC transport correspondent Richard Westcott said that, while Mr Laidlaw's final report had not named names, another completed inquiry by Eurostar chairman Richard Brown - the results of which are yet to be made public - would do just that.
He said that had been left to another inquiry led by Eurostar chairman Richard Brown, which has been completed but not yet made public. A spokesman for FirstGroup said the report reiterated that it was not at fault and it hoped Mr Brown's review would "provide certainty and confidence in the future of rail franchising".
Mr Laidlaw had been due to appear before the House of Commons Transport Select Committee this week, but he will now give his evidence on 18 December. "It is especially disappointing that passengers and taxpayers will not see the benefits that our successful bid would have delivered," he added.
A spokesperson for FirstGroup said the report reiterated that it was not at fault. Virgin Rail Group chief executive Tony Collins said the firm would provide an "even better service" on the West Coast Mainline now that it had been allowed to run the service for another 23 months.
"We now await the outcome of the independent review being carried out by Richard Brown and hope this will provide certainty and confidence in the future of rail franchising." TSSA rail union leader Manuel Cortes said the "long-running Whitehall farce that is rail franchising just gets more ludicrous by the day".
Announcing the temporary contract for Virgin to run trains on the West Coast Mainline, Mr McLouglin said the Department for Transport would be able to shorten the 23-month period "by up to six months if a subsequent franchise can be let on a shorter timescale". "So we have spent £40m of taxpayers' money on a franchise which has stayed with Sir Richard Branson anyway," he added.
He also announced a new hourly service between Glasgow and London. 'Shocking ineptitude'
'Better service' But rail customer watchdog Passenger Focus welcomed the Virgin Trains development saying passengers would "welcome the stability this deal will bring".
Also on Monday, Virgin confirmed it would be bidding again to run the West Coast Mainline in the long term. It also said it would like to bid for the East Coast Mainline, which is currently in public hands until December 2013. And Association of Train Operating Companies chief executive Michael Roberts said passengers and the rail industry would now have clarity about the next two years on the West Coast line and urged ministers and officials to "get the programme of franchising back on course".
The chief executive of Virgin Rail Group, Tony Collins, commenting on the extension of the company's agreement to run the West Coast Mainline, promised "even better service". Shadow transport secretary Maria Eagle said the Laidlaw inquiry had delivered "a damning verdict on the government's shambolic and incompetent handling of rail franchising since the election".
He said: "We are proud of what we have achieved since 1997, but there is undoubtedly more to come and we will work closely with the DfT to bring even better services in future." And Rail, Maritime and Transport union general secretary Bob Crow said that, "because of the shocking ineptitude right at the top of this rotten government, Sir Richard Branson has muscled his way into a monopoly provider position".
Michael Roberts, chief executive of the Association of Train Operating Companies, said passengers and the rail industry would now have clarity about the next two years on the West Coast line. The Public and Commercial Services union, meanwhile, which represents one of the three suspended civil servants, said the report confirmed the issues involved in the bid were "very complex".
"Ministers and officials must now address the specific flaws that led to the cancellation of this competition and get the programme of franchising back on course," he said. It said it was "disgraceful, but not out of character for this Tory-led government, how quick ministers were to try to pin the blame on civil servants".
The general secretary of the Rail, Maritime and Transport Workers union, Bob Crow, said there had been a "reckless high-wire act that has taken the negotiations between Virgin and the DfT right to the very brink".
"Because of the shocking ineptitude right at the top of this rotten government, Sir Richard Branson has muscled his way into a monopoly provider position and him and his Virgin Trains shareholders will be laughing all the way to the bank.
"The case for renationalisation of Britain's railways is now overwhelming."