LONDON, Oct 3 – Britain’s government on Wednesday scrapped a decision to strip Richard Branson’s Virgin Rail Group of its rail franchise after admitting there were serious flaws in the bidding process.
The U-turn was reportedly set to result in the suspension of some government staff responsible for the decision in August to award the West Coast main line from London to Glasgow to rivals FirstGroup.
Transport minister Patrick McLoughlin announced that several other franchising competitions had also been halted pending the outcome of two independent reviews into the fiasco.
“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,” McLoughlin said.
“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.”
The government said it would no longer contest a lawsuit brought by Virgin over the franchise, adding that the mistakes had emerged while it was preparing for the High Court case.
Tycoon Branson welcomed the decision.
“From the moment we found out that FirstGroup had been made the preferred bidder with a completely unrealistic bid, we questioned the way the offers had been assessed, and asked the Government to review and explain how it came to its decision,” he wrote in his blog on the Virgin website.
“We were convinced the process was flawed but despite our best efforts we were met with silence by the Department for Transport.”
Virgin Rail — 51-percent owned by Virgin Group and 49-percent by transport firm Stagecoach — has been running the route, which serves 31 million passengers, since 1997.
During that time it introduced tilting high-speed Pendolino trains and more than doubled passenger numbers.
The transport department said there had been mistakes in the way that passenger numbers and inflation were taken into account, leading to a miscalculation of how much money bidders were asked to guarantee.
British media said there was expected to be an announcement later Wednesday about the suspension of some staff.
The decision to ditch the deal means there is no arrangement in place to operate trains on the West Coast line when the existing franchise expires in December.
But McLouglin said: “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.”
FirstGroup bid a basic £5.5 billion (6.8 billion euros, $8.9 billion) to run services until 2026, £700 million more than what Virgin had offered.
The West Coast Main Line is the busiest and the most important inter-city rail route in Britain, connecting London to major cities including Birmingham, Manchester, Liverpool and Glasgow.