Taxpayer foots bill for DfT’s west coast mainline incompetence

The west coast mainline fiasco has cost the taxpayer a "significant" amount of cash, the government's public spending watchdog has found.

The publication of the National Audit Office's (NAO) report into the abandoned process means another day of humiliation for civil servants at the department, who were condemned for their "damning failure" by new transport secretary Patrick McLoughlin in the Commons yesterday.

Officials were forced to cancel the bidding process after a legal challenge from Virgin Rail against the decision to award the lucrative franchise to rival train operator First Group.

It subsequently emerged the process was fundamentally flawed. The NAO said there were "significant errors" in the tool used by the DfT to calculate how big a loan bidding companies would be required to have, in order to guarantee franchise payments to the government.

There was no one person in charge of the process and the competition "lacked strong project management", the NAO 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," NAO chief Amyas Morse said.

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

Staff and adviser costs, legal costs and external advisers together cost the taxpayer over £9 million, the NAO found.

Yesterday Sam Laidlaw's report into the fiasco found that Virgin and First Group had been given confusing information and were treated inconsistently by the department.

"His report appears to blame officials for many of these problems on the basis ministers were not made sufficiently aware, or were even misled," transport committee chair Louise Ellman said.

"This begs serious questions about ministerial accountability."

Peter Riddell, director of the Institute for Government, said there had been "failings at every level" – and warned that a big part of the problem might be civil servants struggling to cope with the impact of austerity.

"We have raised the issue of a 'fragile' Whitehall getting through a challenging era of cuts," he commented.

"This is possibly an early glimpse of what happens when parts get stretched too far doing too many things at the same time. What matters now is that the civil service and ministers find a way forward and learn these harsh lessons quickly."