Rail franchise blame game gets up steam

Two Cabinet ministers and civil servants at the Department for Transport are fighting an increasingly bitter blame game behind closed doors over the collapse of the government's system for awarding rail franchises.

Former transport secretary Justine Greening was informed there were "small but non-critical errors" in the franchise competition before she was reshuffled to the Department for International Development last month, the Times newspaper reported.

Theresa Villiers, who is now the Northern Ireland secretary, was the rail minister responsible at the time. She remains in the Cabinet while three unnamed civil servants, thought to be relatively junior, have been sacked.

Bernard Jenkin, chair of the Commons' public administration select committee,  told the Standard newspaper: "At first glance, this does appear to be a civil service blunder and not a problem of policy that is down to ministers."

Gus O'Donnell, the former head of the civil service, conceded on the Today programme this morning: "We are suffering in some areas where there are skills shortages."

The Department for Transport's permanent secretary, Philip Rutnam, is carrying out an internal review, while the civil service's overall chief Jeremy Heywood is also leading an investigation.

In parliament, the Commons' influential public accounts committee (PAC) is planning to probe the franchise fiasco alongside a separate investigation by MPs on the transport committee.

"It exposes in a very stark way that the present conventions on accountability between civil servants and ministers to Parliament and the public aren't working," PAC chair Margaret Hodge told Today.

"It's yet another example … of where the civil servants themselves have not really captured and taken on the role that is expected of them in today's society."

Greening and Villiers could find their positions vulnerable if more revelations emerge that they carried significant responsibility for the process which led to yesterday's humiliating reversal.

The new transport secretary, Patrick McLoughlin, announced shortly after midnight that the west coast main line franchise competition process was cancelled because of fundamental flaws – including the failure to allow for the effect of inflation on revenue.

His position is thought to be safe as he was not involved in the key decisions that led to the failure, dubbed a "fiasco" by Virgin Rail's Richard Branson.

Virgin Rail is expecting to be asked to continue to run rail services on the route, which serves London, Birmingham, Manchester and Glasgow, while government officials begin the process once more. The cancelled franchise competition could cost the taxpayer as much as £300 million.

Fifteen months have already passed since Virgin, FirstGroup and two other rail companies bid for the lucrative franchise. FirstGroup, which business analysts now expect may be unable to offer an expected dividend to shareholders after being told it had not won the franchise, is considering legal action.

"The government is right to hold up its hands when mistakes have been made, but this illustrates the struggle it sometimes has with major procurements," CBI director-general John Cridland said.

"An urgent focus is needed to improve its commercial skills and expertise so that this does not happen again, especially with several large franchises up for renewal over the next 18 months."