Delayed rail competition to run train services between Exeter and London faces being scrapped

A DELAYED rail competition to run train services between Exeter and London faces being scrapped altogether.

Cancelling the deal for the Great Western network, one of three franchises ‘paused’ in the wake of the West Coast mainline fiasco, is among the potential costs identified by the Department for Transport according to a government spending watchdog.

The department says no decision will be taken on the contract until the findings of an independent review into franchising, triggered by the West Coast debacle and being carried out by Eurostar chairman Richard Brown, is published at the end of the year.

Letting the 15-year Great Western franchise was at an advanced stage, with bids due to be submitted in October, and a new operator announced in March 2013.

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But the contract was put on hold when the Government was forced to pull the plug on the controversial West Coast deal, after “significant technical flaws” were found in the way the franchise process had been conducted.

Going back to the drawing board would inevitably add to delays and costs, although transport officials stress bidders are liable for anything they have spent so far, whether or not the process “…is varied or terminated”.

There were four shortlisted bidders for the contract - FirstGroup; Arriva Trains; National Express; and Stagecoach.

A report by businessman Sam Laidlaw found a series of errors by DfT officials in the handling of the West Coast franchise which went on to be awarded to FirstGroup last August.

It was only when Sir Richard Branson, whose Virgin Trains’ company had lost out to FirstGroup in the bidding, mounted a legal challenge to the decision that problems emerged.

Although highlighting officials’ shortcomings, Mr Laidlaw said there had been constant changes of permanent secretary at the DfT and “and the resources of the DfT were excessively stretched due to the Government's spending review and the competing pressures of other projects”.

The Great Western franchise was among these demands according to the report.

A separate report by the National Audit Office said the department had started a project to identify the full costs to the taxpayer of cancelling the West Coast franchise, which has already been put at least £40 million.

One area of potential extra spending, according to the NAO report was: “The department may incur internal and bidders’ costs if it chooses to cancel competitions it has paused – on Great Western, Essex Thameside and Thameslink – following the findings of the Brown review.”

A DfT spokesman said: “No decision on the Great Western franchise will been taken until we have considered the Brown report, but the Great Western invitation to tender states that each bidder shall be responsible for all costs, incurred whether or not the bid process is varied or terminated.”

A spokesman for FirstGroup said of the franchise:

“It’s still postponed, it’s not cancelled. It’s speculation at the moment as to what will happen.”