The cancelling of the controversial West Coast Main Line rail franchise award, for rail services connecting London with cities in the West Midlands, the North West, north Wales and Scotland, was "wholly and squarely" down to a Whitehall fault, Transport Secretary Patrick McLoughlin has said. Mr McLoughlin pulled the plug on the whole process early on Wednesday morning, saying "unacceptable mistakes" were made by the Department for Transport in the way it managed the franchise bids from FirstGroup, Virgin and two other companies.
Mr McLoughlin said he was "very angry" about what had happened. He went on: "The original model didn't take into account inflation and also some elements of the passenger number increases over a number of years. 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 DfT. Both of those two companies acted properly on the advice that they were getting from the Department." Speaking later on Sky News, Mr McLoughlin said: "There have been some suspensions of civil servants today." He said the West Coast decision was "embarrassing and regrettable" and he was "very sorry it had happened".
There will be a £40 million cost to taxpayers of the scrapping of the process which would have meant Sir Richard Branson's company Virgin Rail losing its West Coast contract to rival transport company FirstGroup. Describing the bidding process as "flawed" and "insane", Sir Richard had launched a legal challenge to the FirstGroup decision. Having intended to contest the challenge, Mr McLoughlin is now dropping his opposition, cancelling the West Coast franchise competition and ordering two independent inquiries into what went wrong with the West Coast process.
Sir Richard, who had questioned FirstGroup's ability to live up to its franchise promises for the whole length of the 13-year 4-month contract, welcomed Mr McLoughlin's decision and said he was hopeful that Virgin would carry on running the franchise. FirstGroup said it was "extremely disappointed" at the news, adding that it had submitted "a strong bid, in good faith and in strict accordance with the DfT's terms".
Maria Eagle MP, Labour's Shadow Transport Secretary, responding to the Government's decision to abandon the West Coast Mainline franchise competition, said: "The West Coast rail franchise fiasco has yet again exposed the shambolic incompetence of this Tory-led Government. Ministers have spent weeks refusing to listen to Labour's call to suspend the award of this contract to enable an independent review to take place. Only last week the Transport Secretary repeated his claim that the process was conducted properly and he would hand over the franchise to First on time, despite all the concerns that had been raised. The Government's belated admission that it ran a flawed tendering process will come as a surprise to no one. The Transport Secretary must now reveal the full details of what went wrong and come clean on the full cost to taxpayers of this shambles. It will be appalling if Ministerial incompetence has left the Government open to legal challenge for which taxpayers will pick up the bill."
Liberal Democrat president Tim Farron, who is MP for Westmorland and Lonsdale in Cumbria, said "people must be held accountable" for the errors. Bob Crow, general secretary of the RMT transport union, said: "The whole sorry and expensive shambles of rail privatisation has been dragged into the spotlight this morning and, instead of re-running this expensive circus, the West Coast route should be renationalised on a permanent basis."
