Exeter to London train deal put on hold

A MAJOR deal to run train services between Exeter and London has been put on hold after significant flaws were found in another rail contract causing it to be scrapped.

An independent review has been ordered by Transport Secretary Patrick McLoughlin into the entire franchising process after he was forced to pull the plug on the controversial West Coast Mainline award as a result of "unacceptable mistakes" made in Whitehall.

It means further delay to the new 15-year Great Western franchise due to start next year.

Bids for the contract had been expected to be received in October 2012 and the new operator announced in March 2013, with the franchise starting in July. This has now been put on ice pending the outcome of the review which is not due to report back until the end of December.

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Exeter MP Ben Bradshaw branded it "staggering incompetence".

He said: "Labour and the Transport select committee warned the process had been flawed. Ed Miliband got his biggest cheer in his speech when he reeled off a list of the Government's shambolic decisions. He could have added this one."

There will be a £40 million cost to taxpayers of the scrapping the West Coast deal which would have meant Sir Richard Branson's company Virgin Rail losing the contract to rival transport company FirstGroup. Mr McLoughlin pulled the plug on the whole process saying "unacceptable mistakes" were made by the Department for Transport (DfT) in the way it managed the franchise bids from FirstGroup, Virgin and two other companies.

Describing the bidding process as 'flawed' and 'insane', Sir Richard had launched a legal challenge to the FirstGroup decision

Having intended to contest the challenge, Mr McLoughlin is now dropping his opposition, cancelling the West Coast franchise competition and ordering two independent inquiries into what went wrong with the West Coast process. Mr McLoughlin said he was "very angry" about what had happened. He went on: "The original model didn't take into account inflation and also some elements of the passenger number increases over a number of years," he 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."

Mr McLoughlin has put on 'pause' the bidding process for three other rail franchises, including Great Western. He said: "I want to make sure what lessons need to be learnt from what went wrong with this have not been repeated in those particular franchises.

Mr McLoughlin said later: "There have been some suspensions of civil servants today."

He added the West Coast decision was "embarrassing and regrettable" and he was very sorry it had happened. The four shortlisted bidders for the Great Western franchise are: First Great Western Trains Limited (FirstGroup plc); GW Trains Limited (Arriva UK Trains Limited – DB (UK) Investments Limited); NXGW Trains Limited (National Express Group PLC); and Stagecoach Great Western Trains Limited (Stagecoach Group plc).