Officials lied about West Coast rail fiasco

According to a committee of MPs, the Department for Transport (DfT) had embarked on an “ambitious, perhaps unachievable” reform in haste. Ministers and senior officials were also lied to, claimed the committee.

FirstGroup was told it had won its bid to take over the franchise from Virgin Trains, but the decision was scrapped after the discovery of “significant technical flaws” in the way the procurement was conducted.

Virgin has been told it can run the service until November 2014, with the fiasco costing taxpayers more than £40 million.

The mistakes came to light after bidder Virgin Trains, which had run the West Coast Mainline since 1997, launched a legal challenge against the decision.

A government-commissioned report led by businessman Sam Laidlaw last month handed down a damning indictment of how the competition was handled. Three members of staff at the DfT were suspended over the episode.

The Commons transport committee says in its report today that the reform of franchising on the UK’s most complex piece of railway was “irresponsible” and needed greater senior-executive involvement and more technical expertise.

“A more direct description of what happened is that ministers and senior officials were lied to about how the outcome of the franchise competition had been reached,” said the MPs’ report.

“We cannot categorically rule out the possibility that officials manipulated the outcome of the competition not only to keep First Group in the running for as long as possible, as Mr Laidlaw suggested, but to ensure that First got the contract.

“We recommend that the DfT find a way of undertaking a full e-mail capture, reporting to someone suitably independent, to help get to the bottom of why DfT staff discriminated against Virgin and in favour of First Group during the franchise competition.”

The committee said that money which could have been spent on transport projects had instead gone to consultants, lawyers and review teams, on work which achieved nothing, and compensated train operators for the DfT’s “incompetence”.

Committee chair Louise Ellman said: “This episode revealed substantial problems of governance, assurance, policy and resources inside the Department for Transport.

“Embarking on an ambitious, perhaps unachievable, reform of franchising, in haste, on the UK’s most complex piece of railway was an irresponsible decision for which ministers were ultimately responsible. This was compounded by major failures by civil servants, some of whom misled ministers. Many of the problems with the franchise competition, detailed in the Laidlaw Report, reflect very badly on civil servants at the DfT.

“However, ministers approved a complex, perhaps unworkable, franchising policy at the same time as overseeing major cuts to the department’s resources. This was a recipe for failure which the DfT must learn from urgently.”

The committee called on Transport Secretary Patrick McLoughlin and the DfT to explain why ministers and senior officials were misled about how subordinated loan facilities were calculated.

“We also want to hear from the secretary of state what lessons he thinks current and future ministers must learn from this episode,” added Ms Ellman.

Rail Maritime and Transport union leader Bob Crow said: “[This report] fails to nail the killer point, that two decades of railway privatisation has turned our tracks into a money-making racket that is beyond reform.”

Dave Prentis, general secretary of Unison, said: “The government’s chaotic mishandling of its own contracting out process and the subsequent waste of £40m worth of taxpayer’s money is a disgrace.”