Bill slapped on taxpayer as Great Western franchise derails

The government's handling of railway franchises has been pretty deft recently, right? No, we're obviously joking. Now it has scrapped the bidding competition for the Great Western franchise between London and Cardiff.

by Michael Northcott
Last Updated: 19 Aug 2013

After the debacle with the West Coast Mainline, in which Virgin lost out to FirstGroup, and then won it back again (for the next year) in a scuffle of bidding technicalities, you’d think the government might have learned some lessons. But alas, it seems not. 

A bidding process for the Great Western railway line, which runs from London to Cardiff, had been started in 2012 to re-award a 15-year franchise, but it was suspended shortly after (in the wake of the Virgin fiasco) and has now been canned altogether.

Predictably, canning the process comes at great cost to the taxpayer, as closing the competition will involve the government reimbursing the train companies that had bid for the contract. Train companies collectively spend millions on such bids, and will claim back whatever applicable sums directly from the Department for Transport. 

The existing franchise, which is held by FirstGroup, will now run until October this year, and is something of a coup for the operator after it lost out to Virgin last year on the West Coast Mainline. 

So, who will the disappointed parties be? Well, the government announced last March that Arriva, Stagecoach and National Express had all been short-listed for the London Cardiff route. They will now have to wait and see what happens after October, as the government has not yet made clear whether a new bidding process will begin after FirstGroup’s extension expires.

The franchising system is in a bit of a mess after all this to-ing and fro-ing. Nine major contracts across the UK are due to expire by the end of 2014, and with public sector tenders normally taking comfortably more than 18 months to be fully processed, transport chiefs are running out of time to get this sorted. 

To be fair to the government, the Virgin/FirstGroup debacle did expose some gaping holes in the franchising system and the bidding process, meaning bosses were left with a choice of using a broken system, or scrapping it altogether. Perhaps they chose the least worst option…

Transport Secretary Patrick McLoughlin, said: ‘These plans mark an important step on the way to restarting the franchising programme, and while I am determined this should happen as quickly as possible, we do need time to get this right.’

If only everyone could share your optimism, Paddy…

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