The unholy franchise mess shows why Government should not be allowed to play trains, says Ed Jacobs in his weekly political comment for the Guardian Northerner
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What a mess. A Virgin train passing a First Group train on the west coast mainline. Photograph: David Cheskin/PA
Avid readers of this blog may remember that last year I questioned whether the East Coast mainline, currently under public control, should now be transferred back to private ownership.
I did so on the basis of a number of problems. Figures showed that it had one of the worst punctuality rates of any train operator in the UK and despite fares going up, services such as unlimited internet were being confined only to first class. The operators also put an end to 100 years of the dining car. Not world-shattering I know, but enough to make you wonder whether a private firm would have been quite so eager to lose such services that provide a competitive edge.
After this week, my suspicions have been reinforced that Government should stay as far away from train travel as possible.
In the wake of the news that the competition to run the West Coast mainline linking much of north west England with London was being cancelled due to what the newly installed Transport Secretary, Patrick McLoughlin described as "deeply regrettable and completely unacceptable mistakes made by my department in the way it managed the process," the Secretary of State announced the establishment of two inquires.
One, led by Eurostar chairman Richard Brown, is looking at the Government's wider rail franchising policies to establish what needs to be learnt from the West Coast fiasco. The other, examining the circumstances that led to this disastrous U-turn, is being led by Sam Laidlaw, Chief Executive of Centrica who this week published his interim findings.
Presenting the report to the Commons, McLoughlin told MPs that the document made for "uncomfortable reading" for the department. That would be an understatement.
Declaring that the events around the franchising of the West Coast route raised "significant issues about the ability of the DfT to effectively conduct rail franchise competitions", what followed was a damning critique of the way the Department ran the process, including:
The department proceeded despite being aware of "a lack of transparency" in the process of detraining the "subordinated loan facility" (SLF), the key part of the risk capital that bidders would have to agree to forfeit if they failed to meet the terms of their contract.
Bidders were not provided with sufficient information to be able to reliably predict the likely size of the SLF to be imposed by the Department.
The level of SLF ultimately required in respect of the two leading bids from First and Virgin was not determined using the Department's own guidelines.
In seeking to explain the reasons for such problems, the report outlines a lack of adequate planning and preparation, "significant resourcing challenges faced by the DfT" and lack of clarity about who at the Department was responsible for what.
So where does this leave us?
While three Government officials have been suspended pending the results of all the inquiries still on-going, those Ministers ultimately responsible, the former Transport Secretaries Philip Hammond (now at Defence), Justine Greening (now at International Development) and the former Rail Minister Theresa Villiers (now Northern Ireland Secretary) remain in their posts. Having all expressed unwavering support for the process, along with the current Transport Secretary this raises questions about how they could have judge what were systematic failures so badly.
As the Shadow Transport Secretary, Maria Eagle told the Commons on Monday:
However the Secretary of State spins it, the truth is that this is a franchise fiasco with not one but four Cabinet Ministers' fingerprints all over it. Who designed the new franchising policy, building significantly greater risk into the process? It was the Secretary of State for Northern Ireland. Who reduced the Department's capability to manage major contracts by cutting a third of the staff, including the directors of procurement, rail strategy and rail contracts? It was the Secretary of State for Defence.
Who decided not to bother with an external audit, turning a saving of thousands into a cost of tens of millions, then delegated the entire process to her junior Minister and then failed to act on warning after warning about flaws in the process? It was the Secretary of State for International Development. And who declared himself satisfied with the whole process before the Transport Committee, despite the growing evidence that something had gone badly wrong, and then added to the chaos in the franchising system by replacing the costs of one competition with the costs of three? It was the current Secretary of State. This is a shambles involving not one but four members of the Prime Minister's Cabinet, and it is about time they took responsibility for it instead of blaming officials.
Officials may not have been so forthcoming with the facts with Ministers, but given that Richard Branson announced in August that he was taking legal action over the process, both Greening and Villiers should have been asking serious questions of the Department to ensure their support for the franchising process was merited.
Sir Richard Branson. On the legal warpath. Photograph: Ferdaus Shamim/WireImage If they had dug sufficiently, in the light of the extent of Laidlaw's criticisms, they surely would have figured it out. That leads to a suspicion, and it's no more than that at the moment, that faced with the media campaign Branson was launching against the Department, ministers did not investigate sufficiently deep enough, raising issues of competence. As Gordon Brown could tell them, as soon as any minister or Government loses public support for its competence it is ultimately far more serious than accusations about ministers all being toffs.
The convention that ministers decide and officials advise is one that has lasted for many years. It is ultimately ministers, who were responsible for formulating the current franchising policy, who should be responsible for ensuring that it works properly.
Given the mess that the Government itself has created on the West Coast, I would argue that this, above anything else makes a clear case for the public sector to stay well clear of UK railways.What do you think? Do events around West Coast make the case against nationalising the railways?
