West Coast fiasco 'to cost £50m'
Civil servant failures over the West Coast rail contract will cost taxpayers "at least £50 million", a report by MPs has said.
There was a lack of leadership at the Department for Transport (DfT) and a failure to "get basic processes right" over the West Coast fiasco, the report from the House of Commons Public Accounts Committee said.
MPs said they were concerned that these basic mistakes could be repeated in future projects such as the London to Birmingham high-speed HS2 scheme and the London Thameslink project.
The report said the department failed to learn from mistakes made in previous projects and senior managers failed to apply common sense during the West Coast bidding process. They also said senior managers had "missed clear warning signs, including from the (rail) industry, that there were serious problems with the (bidding) competition".
The committee said: "We are astonished that there was no senior civil servant in the team despite the critical importance of this multibillion-pound franchise." The MPs added that they were also "astonished that the (DfT) Permanent Secretary (Philip Rutnam) did not have a detailed understanding and oversight of the (franchise) competition".
After DfT errors in the process had been identified, Transport Secretary Patrick McLoughlin scrapped the bidding which had seen Virgin Trains lose out to rival transport company FirstGroup in the battle for a new, 13-year West Coast franchise. Instead, Virgin is carrying on running the West Coast service until November 2014, with a new bidding process starting after that.
Launching the report, the committee's chairman Margaret Hodge said: "The DfT's complete lack of common sense in the way it ran the West Coast franchise competition has landed the taxpayer with a bill of £50 million at the very least. If you factor in the cost of delays to investment on the line, and the potential knock-on effect on other franchise competitions, then the final cost to the taxpayer will be very much larger."
She went on: "The franchising process was littered with basic errors. Senior management did not have proper oversight of the project. Cuts in staffing and in consultancy budgets contributed to a lack of key skills. We are astonished that the Permanent Secretary did not oversee the project because he was told he could not see all the information which might have enabled him to challenge the processes, although it was one of the most important tasks for which the department is responsible. Given that the department got it so wrong over this competition, we must feel concern over how properly it will handle future projects, including HS2 and Thameslink."
Bob Crow, leader of the RMT transport union, said: "The stench from the fall-out of the West Coast franchise continues to hang over Britain's transport industry as it becomes clearer with every examination that the ministers responsible for this shambles could not be trusted to run a whelk stall, let alone multibillion Government contracts. No wonder the Thameslink/Siemens fleet contract remains unsigned nearly two years on with these jokers at the helm, and the case for that work to go to Derby and not Germany remains rock solid. Underpinning all this is the fact that privatisation is a corrosive and expensive political project doomed to repeated and costly failure, twice on the East Coast and now on the West. Fiddling with processes won't work. It's the whole rotten policy that needs dumping with a return to public ownership."
Richard Hebditch, campaigns director of Campaign for Better Transport, said: "The mistakes with the West Coast are clear for everyone to see. But the biggest problem is a franchise system where the only deciding factor is who promises the biggest payment back to government. What the Public Accounts Committee report shows is that we can't even rely on the figures for that decision. Franchising needs to be completely reformed so that what counts are improvements to the service on offer, rather than complex calculations of profit and loss that don't stack up."