Bloomberg News

U.K. Officials Lied Over Bias in West Coast Bid, Lawmakers Say

January 30, 2013

U.K. transport ministers were lied to and must take their share of the blame for the botched franchising process for the West Coast mainline rail route, lawmakers said.

The award of the contract to FirstGroup Plc and its subsequent withdrawal after a complaint by Virgin Trains, which has already cost more than 50 million pounds ($79 million) in compensation and fees, was the result of poor management, lies by officials and an attempt to change the system while the bids were being evaluated, Parliament’s Transport Committee said in a report published in London today.

“Embarking on an ambitious, perhaps unachievable, reform of franchising, in haste, on the U.K.’s most complex piece of railway was an irresponsible decision for which ministers were ultimately responsible,” Louise Ellman, the opposition Labour Party lawmaker who heads the committee, said in a statement. “This was compounded by major failures by civil servants, some of whom misled ministers.”

Department for Transport officials deliberately gave ministers inaccurate information about the way the requirements for subordinated-loan facilities were adjusted to favor FirstGroup over Virgin, the cross-party panel said. A report by Sam Laidlaw, chief executive officer of Centrica Plc (CNA), used what the report described as “careful” language to say that “inaccurate statements” had been made.

“A more direct description of what happened is that ministers and senior officials were lied to about how the outcome of the franchise competition had been reached,” the committee said. “We recommend that the department explain why this happened, if necessary after decisions have been reached on whether or not to take disciplinary action against particular members of staff.”

E-Mail Capture

There should be a capture of all e-mail traffic from the officials involved to establish what had happened, the committee said. It was unable to see the e-mails in preparing its report.

“We cannot categorically rule out the possibility that officials manipulated the outcome of the competition, not only to keep FirstGroup in the running as long as possible, as Mr. Laidlaw suggested, but to ensure that First got the contract,” the panel said. A further investigation is needed “to help get to the bottom of why DfT staff discriminated against Virgin.”

Ministers should learn to make policy that is within the capability of their departments and officials should be clearer in drawing their attention to risks, the panel said.

“We strongly suspect there are lessons for ministers in terms of more realistically matching policy ambition to departmental capacity and resources,” it said.

After the failure of the bidding process, Virgin Trains, the existing operator of services on the West Coast Mainline, was awarded a franchise to provide services until November 2014, by which time a long-term franchise will have been awarded.

``The examination of e-mails from key officials found no evidence that this was anything other than simple human error,'' the DfT said in an e-mailed statement. ``We are putting in place measures that will prevent this embarrassing episode from happening again.''

To contact the reporter on this story: Thomas Penny in London at tpenny@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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