The decision to award FirstGroup the West Coast Main Line rail franchise has been cancelled following the discovery of significant "flaws" in the way the bidding process was conducted.
FirstGroup was set to take over the running of the London to Scotland line from December but Virgin Rail - which currently runs the service - launched a High Court challenge against the decision.
The Department for Transport (DfT) said today they would no longer contest the judicial review sought by Sir Richard Branson's company.
Transport Secretary Patrick McLoughlin has also ordered two independent reviews into the competition process.
– Transport Secretary Patrick McLoughlin
I have had to cancel the competition for the running of the West Coast franchise because of deeply regrettable and completely unacceptable mistakes made by my department in the way it managed the process.
A detailed examination by my officials into what happened has revealed these flaws and means it is no longer possible to award a new franchise on the basis of the competition that was held.
I have ordered two independent reviews to look urgently and thoroughly into the matter so that we know what exactly happened and how we can make sure our rail franchise programme is fit for purpose.
West Coast passengers can rest assured that while we seek urgently to resolve the future arrangements the trains that run now will continue to run, with the same drivers, the same staff and timetables as planned. The tickets that people have booked will continue to be valid and passengers will be able to make their journeys as planned.
Evidence of significant flaws in the DfT's approach emerged while officials were gathering evidence for the High Court legal proceedings, the department said. It said the flaws stemmed from the way the level of risk in the bids was evaluated.
The DfT added that mistakes were made in the way in which inflation and passenger numbers were taken into account and how much money bidders were then asked to guarantee as a result.
FirstGroup said they were "extremely disappointed" by the DfT's decision to cancel their West Coast Main Line contract.
– FIRSTGROUP STATMENT
Until this point we had absolutely no indication that there were any issues with the franchise letting process and had received assurances from the DfT that its processes were robust and that it expected to sign the contract with FirstGroup soon.
We are extremely disappointed to learn this news and await the outcome of the DfT's inquiries.
The DfT has made it clear to us that we are in no way at fault, having followed the due process correctly.
We submitted a strong bid, in good faith and in strict accordance with the DfT's terms.
– Sir Richard Branson
I am pleased to say that the DfT has looked at all of the facts and found significant flaws in the way it's officials handled the process. They have basically acknowledged that what we had been saying is correct. The same procedures were not followed and "deeply regrettable and completely unacceptable mistakes" were made by the Department.
At the House of Commons Select Committee we called for all franchise competitions to be paused and a thorough, independent review of the process. We are grateful that Patrick McLoughlin is now doing this.
We also appreciate the DfT publicly acknowledging these errors, and are hopeful they will now accept that Virgin Trains should carry on running the West Coast Main Line and ensure that passengers continue receiving our team's award-winning service.
What cancelling the West Coast Main Line competition means:
- FirstGroup, who were due to take over the running of the West Coast Main Line in December, will no longer be awarded the franchise.
- The Department for Transport will no longer contest the judicial review sought by Sir Richard Branson's company Virgin Rail - who currently run the service.
- Transport Secretary Patrick McLoughlin has ordered two independent reviews into the competition process.
- An announcement is expected later today about the suspension of government staff while investigations are conducted.
- The Government has paused all other outstanding franchise competitions - Great Western, Essex Thameside and Thameslink.
- Officials have now been asked to examine the options for the operation of the service after December 9.