'Complete lack of common sense': The disaster of the West Coast franchise

Virgin Rail was one of the companies bidding for the franchise before it was cancelled by the DfT.
Virgin Rail was one of the companies bidding for the franchise before it was cancelled by the DfT.

By Tony Hudson

The Department for Transport has been told to 'get its house in order' by MPs following the bungling of the InterCity West Coast rail franchise competition.

A report published by the Public Accounts Committee (PAC) claimed the DfT failed to learn from past mistakes and, as a result, left itself open for legal challenges leading to the competition's cancellation.

"The Department for Transport'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", said Margaret Hodge, chair of the PAC.


"The department made fundamental errors in calculating the level of risk capital it would require bidders to put on the table and it did not demand appropriate levels of capital from both bidders."

The £50 million cost to the taxpayer comes as a result from the DfT's inability to properly manage the competition and will mostly go to compensating bidders following the cancellation.

The report by PAC stated these numbers were only from the InterCity West Coast franchise competition and it was not yet clear if other franchises would face similar trouble.

Hodge went on to criticise the DfT's handling of the competition, and raised questions about its ability to effectively manage the large scale projects coming up, emphasising the need for it to "get its house in order".

"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", she added.

The InterCity West Coast franchise was up for renewal in 2012, with Abellio, FirstGroup, Keolis/SNCF and Virgin Rail competing for the contract.

Initially, FirstGroup was announced as the winning bidder before legal challenges from Virgin Rail caused the cancellation of the deal.

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