West Coast Rail Franchise hits the buffer stops

BBC Breakfast journalist Susannah Reid: “Well, this is all very embarrassing for you.”

Transport Secretary, Patrick McLaughlin: “Yes”

Late last night, the UK Government brought a stop to the controversial Inter City West Coast rail franchise, which had been awarded to First Group, displacing the incumbent franchisee Virgin Trains.

Not only was there criticism that the DfT had awarded the franchise to First largely on the basis that it offered the Treasury more money over the life of the franchise, but that the First bid was also allegedly “lower quality”, while Virgin criticised the First bid as”unsustainable”, suggesting that First’s West Coast operations would go the way of East Coast out of Kings Cross – that First would surrender the the franchise, and the Government would be left to use public money to pick up the pieces.

There was also public outcry and grass-roots “underdog support” for Virgin’s operations, including a massive e-petition to Government to urge investigation and reconsideration of the decision.

Due to give evidence this to the judicial review Virgin had requested, the Government have slammed the brakes on hard, while reportedly some DfT staff members involved in the process have been suspended pending an investigation.

But, this all has a cost to the taxpayer.

Firstly, the Government have said they will need to reimburse costs to the franchise applicants – and this probably means the non-shortlisted companies (Abellio and Veolia) as well as First and Virgin. Branson’s blog said that the recent ICWC bid cost Virgin £14m, just to put the franchise bid together.

So, we’re looking at shelling out something in the region of £50m of public money to the companies who applied for the franchise, to defray their expenses in placing bids.

There’s also the question of who operates the West Coast from December. There’s two main options – 1) Allow Virgin to continue, or 2) Have the DfT directly operate the railway, as on the East Coast route from Kings Cross.

Branson had previously offered to continue running the trains while the decision was reviewed.

If this offer still stands, and is non-prejudicial, it would be foolish of the DfT to squander even more public money by not taking it up.

Update 20.00 3/10/12:

The CEO of Passenger Focus has made a very valid point on his blog: Passenger confidence must be maintained. People are creatures of habit and don’t like uncertainty.

3 thoughts on “West Coast Rail Franchise hits the buffer stops”

  1. In the longer term, this won’t cost the government £50m. All they’ll do is charge that cost to the winning bidder of the re-run competition. All the winner will do is take it from passengers.

    1. Indeed! You’ll notice that I said “the taxpayer”, and not the Government. Either way, the man in the street will end up shelling out for this fiasco.

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