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04.10.12

West Coast errors lead to suspension of officials

People inside and outside of the rail industry have responded with astonishment to the shambolic developments in the West Coast franchising process, as criticism builds over the DfT’s and ministers’ handling of events.

Three civil servants were suspended yesterday over the mistakes, yet commentators have suggested that former transport ministers Justine Greening and Theresa Villiers must take some responsibility. Government sources have said they cannot be blamed.

The errors concern an underestimation of the potential value of franchise, mistakes on the number of passengers expected to use the service and the way inflation was calculated.

Cancelling the contract, and pausing three other franchising processes, will lead to huge costs in compensation for bidders, and could lead to further costs including potential legal action from FirstGroup, and lower revenues due to less aggressive bids on future rail franchises.

Transport secretary Patrick McLoughlin has originally stated he was “satisfied that due diligence was done by the department”.

However, he said on Wednesday: “I want to make it absolutely clear that neither FirstGroup nor Virgin did anything wrong.

“The fault of this lies wholly and squarely with the Department for Transport. Both of those two companies acted properly on the advice that they were getting from the Department.”

Industry professionals have commented on the severity of the mistakes, with unions calling for the West Coast route to be renationalised for good.

Michael Roberts, chief executive of ATOC said: “The discovery of significant flaws in the DfT’s franchising process is a cause of great concern.

“The two independent reviews will need to restore the confidence of taxpayers and passengers, and those who might want to bid for franchises in the future. We look forward in particular to engaging with the review into the wider rail franchising programme.”

Anthony Smith, chief executive of Passenger Focus, said: “Passengers who use the West Coast are already wondering what is going to happen to their trains. Government needs to show what it is doing to ensure that their day-to-day service won't be affected by this decision, and must not pass on the cost of stalled bid processes to passengers.

“Passengers will want to know what timetables will be in operation, how they buy tickets and how much they cost, and what contingency plans will be in place for the major engineering works planned for the Christmas period.

“These franchise decisions affect millions of daily lives – Government needs to work hard to restore confidence in the process.”

RMT general secretary Bob Crow said: “You can bet your life that the same basic mistakes made by the Government and its officials on the West Coast tender have been made on other franchises as the private sector lie through their teeth with the sole intention of robbing us blind.”

TUC general secretary Frances O’Grady said: “This embarrassing episode has exposed once again the inherent flaws of the current franchising system which has resulted in expensive legal challenges and a PR disaster for the Government.

“It is essential that any plans to re-privatise this route are now abandoned and the West Coast mainline is also taken back into public ownership. Instead of encouraging unsustainable bids that are not in the interests of passengers and taxpayers the Government needs to realise the value of state-run services.”

Simon Walker, director general of the Institute of Directors, said: “It is shocking that such a crucially important process has gone so seriously wrong. Government tendering processes must be whiter than white, or firms will be deterred from applying to take contracts on, which will harm service delivery.”

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