West Coast rail fiasco to cost taxpayer £50mln

The collapse of a franchise deal for the running of the West Coast rail line is a sign of “serious problems”, the government’s spending watchdog said Friday as the cost to the taxpayer looked set to spiral to £50 million.

The National Audit Office (NAO) report said there was a “lack of management oversight and ownership” by the Department of Transport of the competition process which saw the franchise awarded to First Group in August.

The government cancelled the decision in October saying that transport ministry officials had made serious mistakes during the bidding process.

Richard Branson’s Virgin Rail, which has been running the London to Glasgow route since 1997, was handed the franchise for a further 23 months on Thursday.

The NAO report said the botched deal represented a “significant cost” to the taxpayer, with the cost of two reviews into the fiasco ordered by the government totalling £8.9 million alone.

This is on top of a £40 million bill which the government has already indicated will be required to repay bidding costs to companies which tendered for the contract.

NAO head Amyas Morse said: “Cancelling a major rail franchise competition at such a late stage is a clear sign of serious problems. The result is likely to be a significant cost to the taxpayer.

“The failure of essential safeguards raises questions about the department’s broader management approach, as well as this specific matter.”

House of Commons Public Accounts chairman Margaret Hodge, a Labour MP, called the handling of the process “a first-class fiasco”.

“It has left the government’s entire policy on rail franchising in disarray, as a further three competitions have had to be put on hold,” she said.

“The total cost to the taxpayer of putting it right is currently unknown but is likely to be significant.”

Transport Secretary Patrick McLoughlin said the NAO’s recommendations mirrored many of the findings of a previous inquiry into the debacle and said work was already under way to implement them.

“I believe the plans we are putting in place to ensure future franchise competitions are conducted on the basis of sound planning, the rigorous identification and oversight of risk, and the right quality assurance will prevent a repeat of these lamentable failures,” he said.