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Spending watchdog say rail blunder will cost taxpayers

A report out today claims taxpayers face a 'significant' bill following a government U-turn over which company operates trains in our region.

Yesterday it went back on it's decision to award the West Coast mainline to First Group over Virgin.

Government spending watchdog, the National Audit Office (NAO) said the Department for Transport's (DfT) running of the West Coast bidding process lacked management oversight, with some staff "confused" by the system.

The Government has already indicated that repaying bidding costs to the companies competing for the franchise is likely to land taxpayers with a bill of around £40 million.

In its report, the NAO said staff and adviser costs, legal costs and money for the two reviews set up by the Government following abandonment of the West Coast bidding amounted to £8.9 million.

NAO head Amyas Morse said: "Cancelling a major rail franchise competition at such a late stage is a clear sign of serious problems.

"The result is likely to be a significant cost to the taxpayer."

Commenting on the report, House of Commons Public Accounts chairman Margaret Hodge, Labour MP for Barking, said: "The DfT's handling of the West Coast franchise was a first-class fiasco."

She went on: "It has left the Government's entire policy on rail franchising in disarray, as a further three competitions have had to be put on hold.

"The total cost to the taxpayer of putting it right is currently unknown but is likely to be significant."

Ms Hodge said the Dft had "blundered into this major and complex competition for one of the biggest franchises in the country without even knowing how key parts of its policy were to be implemented".

She added that bidders were invited to tender before the department knew how it would calculate companies' capital needs.

Also, she said, the department placed extraordinary reliance on a model that was not fit for making commercial decisions and had not been sufficiently scrutinised.

Predictably, this left it wide open to legal challenge from bidders.

Ms Hodge went on: "The department's conduct was characterised by haste, confusion and weak internal and external communication.

"However, the ultimate failure of this competition was sealed by a rich mix of the department's feeble and forever changing management and almost non-existent oversight."

Mr Morse said: "The failure of essential safeguards raises questions about the department's broader management approach, as well as this specific matter.

"It is commendable that, once it uncovered the problems on the franchise, the department sought to be open about what happened and to investigate further.

"Among the lessons to be learnt is that staff with line-management responsibilities should be clear that assurance processes are not a substitute for proper supervision and management controls."

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