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When Sir Richard Branson strongly criticised the government’s decision to award the franchise to run the west coast main line to FirstGroup last August at the expense of Virgin Rail, it seemed liked corporate sour grapes.
Now his concerns have been vindicated. A committee of MPs has made the latest addition to a damning assessment of the bidding process for the contract, saying that the Department for Transport (DfT) had run it with a “complete lack of common sense”. The bill for taxpayers would be more than £50 million.
The report from the House of Commons Public Accounts Committee said that there was a lack of leadership at the DfT and a failure to “get basic processes right” over the west coast fiasco. MPs said they were concerned that these mistakes could be repeated in future projects such as the high-speed HS2 scheme and the London Thameslink project, which has already been criticised by unions and trainmaker Bombardier for the decision to award a lucrative rolling stock order to Siemens.
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. Managers had “missed warning signs 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 importance of this multi-billion-pound franchise.” The MPs were “astonished that the DfT permanent secretary did not have detailed understanding and oversight of the competition”.
Once the errors in the process were identified, transport secretary Patrick McLoughlin scrapped the bidding. Virgin is carrying on running the west coast service until November next year, with a new bidding process starting after that.
Committee chairman Margaret Hodge, Labour MP for Barking, said: “The DfT’s complete lack of common sense in the way it ran the 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. 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.”
Branson can afford, perhaps, to feel a little smug at all of this. Virgin, meanwhile, claimed that a petition started by a customer that attracted 174,000 signatures prompted the parliamentary debate that led to the west coast contract decision being overturned.