Virgin gets rail deal as inquiry finds big flaws

 
Marion Dakers
A STINGING report yesterday blamed disorganisation and overstretched staff at the Department for Transport (DfT) for the failure of the West Coast Main Line franchise contest.

The DfT confirmed yesterday that Virgin Trains, which had lost out in its bid for the 13-year West Coast franchise, has agreed to run the route for up to 23 more months while the competition is rerun.

Virgin will get a one per cent margin on operating revenues, with the cost risk shouldered by the DfT, subject to renegotiation.

The DfT yesterday reinstated the trio of bureaucrats who were suspended in October, after transport minister Patrick McLoughlin scrapped its decision to give the route to FirstGroup.

The decision came on the same day that Centrica boss Sam Laidlaw published his full report into what went wrong during the process of tendering.

Laidlaw criticised the DfT for a confusing chain of command, which led to incorrect sums on loans being handed to the ministers who picked the winning bid, without anyone warning about possible mistakes.

He said “an accumulation of significant errors” meant that the subordinated loans used to shield the taxpayer from risk had been miscalculated. In one example, the loan requirements were understated by 50 per cent because inflation was wrongly factored in.

The coalition’s spending review meant that staff in the DfT were “excessively stretched”, Laidlaw said, as he recommended that staffing and training be reviewed.

Transport secretary Patrick McLoughlin yesterday said the report was “uncomfortable reading” and set out plans to restructure his department.