Minister blames civil servants for West Coast franchise fiasco

They were suspended by Permanent Secretary Philip Rutnam after Transport Secretary Patrick McLoughlin laid the blame for the fiasco “wholly and squarely” on the DfT.

A DfT spokesman said: “Three officials involved in the West Coast franchise competition were today suspended by the Permanent Secretary while the full facts are established. No further details will be issued at this time about the suspensions.”

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.

Mr McLoughlin pulled the plug on the whole process early this morning, saying “unacceptable mistakes” were made by the DfT in the way it managed the franchise bids from FirstGroup, Virgin and two other companies.

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.

Speaking today, 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,” he said.

“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.”

Mr McLoughlin has put on “pause” the bidding process for three other rail franchises.

He told the BBC Radio 4 Today programme: “I want to make sure what lessons need to be learnt from what went wrong with this have not been repeated in those particular franchises.”

Asked how much it would cost to reimburse the costs of the four companies who entered into the bidding process, he replied: “We estimate that to be in the region of about £40 million.”

He went on: “I’m not going to apologise for the terrible mistake that has been made by the Department. We need to get to the bottom of what went wrong as far as that is concerned.”

He revealed that he had spoken to the parties involved last night, including Sir Richard, saying that what had been found was “deeply regrettable”.

Virgin has run the West Coast line since 1997, more than doubling annual passenger levels and introducing high-speed tilting Pendolino trains on the London to Scotland route.

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 today 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”.

Labour leader Ed Miliband said: “When you look at the latest fiasco with the West Coast line - another Government screw-up, another Government mistake, another case of them blaming someone else, apparently they are saying it is the fault of their civil servants - I think competence is an issue.”

Shadow transport secretary Maria Eagle said the West Coast franchise process had been a “fiasco” which had “yet again exposed the shambolic incompetence of this Tory-led Government”.

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.”

The Campaign for Better Transport said the West Coast announcement “highlighted the weaknesses in the franchise process”, while the TSSA rail union said passengers were paying “sky-high prices for this long-running Whitehall farce”.