Eurostar’s Richard Brown has been appointed to bring back credibility to the franchising process in the wake of the flawed West Coast competition

Eurostar chairman Richard Brown has been appointed by the government to undertake an independent review of the rail franchising programme. It follows the discovery of “significant technical flaws” in the way that the Department for Transport handled the competition for the new West Coast franchise.

Brown will ask whether changes are needed to the way risk is assessed and to the bidding and evaluation processes. He will also consider how to get the active franchise competitions back on track as soon as possible. He will report by the end of the year.

The DfT’s decision to scrap the West Coast franchise competition and halt three other active competitions is set to cost taxpayers many millions of pounds.

The DfT will reimburse the four West Coast bidders for the costs that they incurred in bidding for the franchise. It is estimated that this will be in the region of £50m.

In addition to this, the delay to the active Essex Thameside, Great Western and Thameslink competitions is likely to require the DfT to negotiate extensions to soon-to-expire contracts from a weak bargaining position. Bids for the Essex Thameside franchise were submitted last week.

The DfT took action this week following the discovery of “deeply regrettable and completely unacceptable mistakes” in the way that it had handled the West Coast franchise. Its decision to award the new franchise to FirstGroup was set to be challenged in court by the incumbent operator, Virgin Trains.

DfT permanent secretary Philip Rutnam said: “The errors exposed by our investigation are deeply concerning. They show a lack of good process and a lack of proper quality assurance.”

Three officials involved in the West Coast competition have been suspended.

Transport secretary Patrick McLoughlin has launched two independent investigations in order to restore confidence in the franchising process. The first will examine the lessons from the West Coast competition. The second, undertaken by Eurostar chairman Richard Brown, will examine the wider rail franchising programme.

While Virgin welcomed the news, FirstGroup said it was “extremely disappointed” – shares in the group lost a fifth of their value on the day after the news was announced. “We submitted a strong bid, in good faith and in strict accordance with the DfT’s terms,” it said.

Abellio and Keolis, which submitted unsuccessful bids for West Coast, will be pleased with the unexpected windfall of around £10m each in compensation. However, there was more sympathy than usual in the industry for the views of Bob Crow, general secretary of the RMT union. “£60m that could have been invested in services will be blown on reimbursing the bidders as the government admit they cannot add up,” he scorned.

 

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