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West Coast rail franchise failure to burden taxpayers with £50m

Written on:December 7, 2023
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Virgin Trains will run on West Coast rail link for the next 23 months, after deal with FirstGroup failed

The West Coast rail franchise process which fell through will cost the taxpayers almost £50m, according to a government spending regulatory’s report.

The failed West Coast rail franchise has led the government to indicate that the onus of repaying bidding costs to the companies competing for the franchise is likely to burden taxpayers with a bill of around £40m. Already Brits are to face rail fare hike, with average rail tariffs in England, Scotland and Wales to climb up to 6% in 2013.

Virgin Trains has now been handed the West Coast franchise for the next 23 months after the deal process with FirstGroup got cancelled. Government spending regulatory’s also accused the Department of Transport’s failed bidding process for West Coast franchise as an effect of management oversight.

The National Audit Office (NAO)’s report states that staff and adviser costs, legal costs and funds for the two reviews set up by the government following abandonment of the West Coast franchise bidding amounted to £8.9m.

Public Accounts Committee chairman Margaret Hodge criticised Department of Transport’s lack of management oversight in West Coast rail franchise, by saying that the bidders were invited to tender before the department knew how it would calculate companies’ capital needs. Hodge added that the department placed extraordinary reliance on a model that was not fit for making commercial decisions and had not been sufficiently scrutinised.

Bob Crow, general secretary of the RMT transport union, said the final cost of the West Coast fiasco could be as high as £100m.

“This cost will not be borne by the ministers responsible for this debacle. It will be carried yet again by the British people and will be paid for through cuts in investment and higher fares, with the train operating companies protected and cushioned in the same way as they have been since privatisation was first unleashed.”, Crow said.

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