West Coast fiasco blamed on cost-cutting

GOVERNMENT cost-cutting and mistakes by civil servants contributed to the mishandling of the West Coast main line rail franchise, an inquiry has found.

The 13-year contract for the route, due to start on Monday, was originally given to FirstGroup, but the government was forced to pull the award after flaws were found in the bidding process.

The inquiry’s findings were published yesterday after the government confirmed the line’s incumbent operator Virgin Rail would continue to run the service, which includes the Manchester to London, for up to 23 months.

According to news agency Reuters, the final report – led by Centrica chief executive and Department for Transport board member Sam Laidlaw – found that the department wrongly calculated the amount of risk capital that bidders would have to offer to guarantee their proposals against default.

As well as individual errors, Laidlaw’s report said that cost-cutting and management changes at a time when the department was taking on other large projects – including high-speed rail, Crossrail and the Olympics – made it more vulnerable to missing errors. It also said that a squeezed deadline gave insufficient time to consider concerns that were raised.

Laidlaw’s report recommended that future competitions are given clear timeline and are better managed with a simpler structure, and with a single director general appointed to look after all rail franchising.

Corin Taylor, senior economic adviser at the Institute of Directors, said: “The report’s findings make shocking reading for anyone concerned about our transport system. The DfT committed error after fundamental error, ignored warnings about what was going wrong and steamed straight into an iceberg. This fiasco has undoubtedly harmed investor confidence in British infrastructure, which is bad news when we need international money to fund crucial infrastructure projects.”

Transport Secretary Patrick McLoughlin said: “I do not hide from the seriousness of these findings, they make extremely uncomfortable reading for the department. They must and will be acted upon.”