Member Article

Virgin wins 23-month contract on West Coast mainline

Virgin Trains have been given a further 23-month contract on the West Coast mainline, after months of discussions, a flawed franchise bidding process and significant Government errors.

The Department for Transport (DfT) announced the Sir Richard Branson’s firm would maintain control of services on the West Coast line, which it has operated since 1997, after an independent inquiry into Government errors.

Fundamental mistakes made in calculations by the Government put a stop to the bidding process for the train line, which DfT admitted to in October this year.

The investigation into the cancelling of the franchise bidding found that “an accumulation of significant errors” led to its failure, as well as “inadequate planning and preparation, complex organisational structure, and a weak governance framework.”

Energy firm Centrica’s chief executive, Sam Laidlaw, who is also a non-executive member of the DfT board, carried out the investigation into Government failings.

He recommended rapid actions to restore confidence in DfT, and added that, despite the monumental flaws in the franchise process, he found no bias against Virgin Trains within the government body.

In reaction to the report, Transport Secretary Patrick McLoughlin said Mr Laidlaw’s findings made for “uncomfortable reading” in the department.

Mr Laidlaw commented: “Building upon and confirming the conclusions from my initial findings, the final report provides an in-depth analysis of the events that led to the flaws whereby the InterCity West Coast competition was cancelled.Alongside this I have also made a series of recommendations for the future.

“I have explained in detail the technical nature of certain errors, specifically around modelling flaws and the Subordinated Loan Facility sizing process.

“In addition, the report outlines an accumulation of contributory causes including 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.

“While it is clear that a number of serious and regrettable errors have occurred, I believe that if acted upon quickly and effectively, my recommendations will help to restore confidence in the DfT’s ability to conduct effective rail franchising and procurement.”

Also commenting on Mr Laidlaw’s review, Patrick McLoughlin said: “It has identified precisely what went wrong, revealing serious failures, as well as offering us a number of sensible recommendations to put things right.

“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.”

He added: “Sam Laidlaw has delivered an uncompromising report that offers us a way to face up to a number of shortcomings and I would like to thank him and his team for producing these findings with such diligence and speed.”

DfT’s Permanent Secretary, Philip Rutnam, concluded: “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.”

This was posted in Bdaily's Members' News section by Miranda Dobson .