Sir Richard Branson’s tantrum paid dividends after the Manchester to London West Coast Mainline contract was scrapped by the government today.
Less than 24 hours after Labour Party leader Ed Miliband attacked the coalition’s persistent U-turning on policies and projects, the Transport Secretary Patrick McLoughlin pulled the plug on stripping Virgin Rail of their 15-year contract.
McLoughlin claimed that the whole bidding process – where FirstGroup were awarded the next 15 years of the line – was ‘flawed and insane’, Sir Richard has also launched a legal challenge into the deal.
And Manchester Lib Dem MP and Member of Transport Select Committee John Leech revealed his disappointment of the U-turn, as taxpayers have been left with a £40million bill to pay.
“It is very disappointing that the government have had to make this decision following mistakes made by civil servants, mistakes which will cost millions,” he said.
“The franchise rules implemented by the previous government was flawed, it did not take into account past performance or even public satisfaction.
“I have long argued that past performance should be taken into account when deciding whether a contract is awarded, and that proper independent scrutiny should be made before a contract is awarded.
“I hope that the Government will change the rules to make the awarding of contracts more transparent and less dependent on who offers the most money.”
McLoughlin claimed unacceptable mistakes had been made by the Department for Transport during the bidding process and two independent inquiries have been set up to investigate what has gone wrong.
“The original model didn’t take into account inflation and also some elements of the passenger number increases over a number of years,” McLoughling said.
“I want to make it absolutely clear that neither FirstGroup nor Virgin did anything wrong. The fault of this lies wholly and squarely with the DfT. Both of those two companies acted properly on the advice that they were getting from the department.”
And the bidding process for three other rail lines has been paused as the coalition attempt to address the West Coast situation.
When questioned how much it would cost to reimburse the four companies involved in the bidding process, McLoughlin told BBC Radio 4: “We estimate that to be in the region of about £40 million.
“I’m not going to apologise for the terrible mistake that has been made by the department. We need to get to the bottom of what went wrong as far as that is concerned.”
Government staff being blamed for the chaos are expected to be suspended.
A spokesman for FirstGroup said the company are ‘extremely disappointed’ and claimed that they had bid for the line in full accordance with DfT’s requests.
Miliband said: “When you look at the latest fiasco with the West Coast line – another government screw-up, another government mistake, another case of them blaming someone else, apparently they are saying it is the fault of their civil servants – I think competence is an issue.”