Government cost cutting that led to West Coast mainline franchise fiasco could cost tax payer £100 million

An internal Department of Transport investigation led by the businessman Sam Laidlaw found that 'organisational changes and resourcing constraints' contributed to flaws in the franchising process

Government cost cutting and a botched reorganisation of the Department of Transport contributed to “unacceptable flaws” in deciding who should run the main railway line between London and Scotland, two damning independent reviews have concluded.

An internal Department of Transport investigation led by the businessman Sam Laidlaw found that “organisational changes and resourcing constraints” contributed to flaws in the franchising process which could end up costing the tax payer up to £100 million.

At the same time a separate report by the National Audit Office concluded that spending cuts which forced the department to reduce its £295 million administration budgets by 33 per cent had led to 500 staff losing their jobs had led to a loss of expertise which might have prevented the fiasco.

It added: “We have consistently highlighted the risks that departments run in cutting costs without fully understanding value.”

Both reports concluded, as first revealed by The Independent earlier this year, that the loss of institutional knowledge and experienced staff members with knowledge of franchising had exacerbated problems.

However Laidlaw cleared politicians of having any direct responsibility for the botched process saying ministers were given “inaccurate reports” on which to base the ultimate award of a new 13-year West Coast franchise to transport company FirstGroup last August.

It was only when Sir Richard Branson, whose Virgin Trains' company had lost out to FirstGroup in the bidding, mounted a legal challenge to the decision that the flaws in the process were discovered.

The mistakes made, the Laidlow report said, were based on making inaccurate risk calculations on the merits of the two bids and giving misleading information to the two companies preparing their bids.

It also highlighted a meeting of Department of Transport officials which suggested there might have been a desire not to eliminate FirstGroup from the bidding process.

At that stage calculations on the risk presented to the taxpayer of the bidders defaulting on payments to run the line was changed to favour FirstGroup.

Ministers were then given “inaccurate statements” as “to the manner in which” civil servants had decided upon the franchise bid.

Today three civil servants who had been suspended while an internal disciplinary investigation was carried out were given permission to return to work. However departmental sources said this move was purely procedural and not an indication of any disciplinary action which might be taken against them in the future.

In another move Mr McLoughlin announced Virgin would carry on running West Coast trains until November 2014 when a new long-term franchise would begin.

In the Commons Mr McLoughlin, who had initially defended the original FirstGroup decision when he succeeded Justine Greening at the DfT in September, told MPs that the report would make “uncomfortable reading for the department”.

He stressed that ministers had made the original franchise award “without being told about the flaws and after being given inaccurate reports”.

“It has identified precisely what went wrong, revealing serious failures, as well as offering us a number of sensible recommendations to put things right,” he said.

“We will not allow these mistakes to be made again and the department is determined to ensure all future franchise competitions are conducted on the basis of sound planning, the rigorous identification and oversight of risk, and the right quality assurance.”

But shadow transport secretary Maria Eagle said it was “decisions and failures by ministers” that led to the collapse of the franchise.

Both Ms Eagle and House of Commons Transport Committee chairman Louise Ellman said the Laidlaw report was “damning”.

Mr Laidlaw said his report had found “a lack of transparency, inadequate planning and preparation, as well as a complex and confusing organisational structure with weak quality assurance and insufficient governance oversight”.

The DfT's Permanent Secretary Philip Rutnam said: “There is no question that this has been a serious blow for the department and I am determined that we learn everything we can from this episode.

“We will implement all of Mr Laidlaw's recommendations, and go further, to ensure we have the right set of skills, support and training to ensure failures like this do not happen again.”

Suggested Topics
News
Jeremy Paxman has admitted he is a 'one-nation Tory' and complained that Newsnight is made by idealistic '13-year-olds' who foolishly think they can 'change the world'.
peopleThe idea has been greeted enthusiastically by the party's MPs
News
Michael Buerk in the I'm A Celebrity jungle 2014
people
Voices
File: David Cameron offers a toast during a State Dinner in his honour March 14, 2012
voicesAnd nobody from Ukip said babies born to migrants should be classed as migrants, says Nigel Farage
Arts and Entertainment
Avatar grossed $2.8bn at the box office after its release in 2009
filmJames Cameron is excited
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksNow available in paperback
Arts and Entertainment
Stik on the crane as he completed the mural
art
News
Happy in his hat: Pharrell Williams
people
Arts and Entertainment
Stella Gibson is getting closer to catching her killer
tvReview: It's gripping edge-of-the-seat drama, so a curveball can be forgiven at such a late stage
News
Brazilian football legend Pele pictured in 2011
peopleFans had feared the worst when it was announced the Brazil legand was in a 'special care' unit
News
i100(More than you think)
Sport
Brendan Rodgers seems more stressed than ever before as Liverpool manager
FOOTBALLI like Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
News
The Magna Carta
archaeologyContemporary account of historic signing discovered
News
Phyllis Dorothy James on stage during a reading of her book 'Death Comes to Pemberley' last year
peopleJohn Walsh pays tribute to PD James, who died today
Sport
Benjamin Stambouli celebrates his goal for Tottenham last night
FOOTBALL
Life and Style
Dishing it out: the head chef in ‘Ratatouille’
food + drinkShould UK restaurants follow suit?
News
peopleExclusive: Maryum and Hana Ali share their stories of the family man behind the boxing gloves
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Senior PHP Developer - OOP, Javascript, HTML, CSS, SQL

£39000 per annum: Ashdown Group: Senior PHP Developer - OOP, Javascript, HTML,...

Austen Lloyd: Commercial / Residential Property - Surrey

Excellent Salary: Austen Lloyd: SURREY MARKET TOWN - SENIOR PROPERTY SOLICITOR...

Recruitment Genius: Graduate Programme - Online Location Services Business

Negotiable: Recruitment Genius: What do you want to do with your career? Do yo...

Recruitment Genius: Senior QC Scientist

Negotiable: Recruitment Genius: This company is a leading expert in immunoassa...

Day In a Page

Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

Christmas Appeal

Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

Is it always right to try to prolong life?

Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

What does it take for women to get to the top?

Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

Knitting pretty: British Christmas Jumpers

Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
French chefs have launched a campaign to end violence in kitchens - should British restaurants follow suit?

French chefs campaign against bullying

A group of top chefs signed a manifesto against violence in kitchens following the sacking of a chef at a Paris restaurant for scalding his kitchen assistant with a white-hot spoon
Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

Just what you need on a New Year hangover...

Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
Cuba set to stage its first US musical in 50 years

Cuba to stage first US musical in 50 years

Claire Allfree finds out if the new production of Rent will hit the right note in Havana
Christmas 2014: 10 best educational toys

Learn and play: 10 best educational toys

Of course you want them to have fun, but even better if they can learn at the same time
Paul Scholes column: I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season

Paul Scholes column

I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
Lewis Moody column: Stuart Lancaster has made all the right calls – now England must deliver

Lewis Moody: Lancaster has made all the right calls – now England must deliver

So what must the red-rose do differently? They have to take the points on offer 
Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game