Civil servants overseeing the West Coast Main Line franchise may have been biased against Virgin Trains, a Commons inquiry has concluded.
Virgin boss Richard Branson
MPs demanded a fresh inquiry into the botched contest to decide which firm would run inter-city services to Birmingham – and said e-mail exchanges between Department for Transport officials should be examined to find out why they treated the company unfairly.
In a damning report, the Commons Transport Committee also said that “ministers and senior officials were lied to” by other officials.
Taxpayers will end up paying £50 million after the decision to award the InterCity West Coast franchise to First Group was overturned last October, the MPs said.
But the Government then announced it was overturning the decision because of “significant technical flaws” in the contest.
An inquiry carried out by the Department for Transport itself highlighted unfairness in the way that subordinated loan facilities – a sum of money to be forfeited if the terms of the franchise were broken – were calculated for rival bidders.
The amount required from Virgin was increased but decreased for First Group.
“Ministers and senior officials were lied to”.Commons Transport Committee
The failures were connected to changes to the franchising system, including the use of subordinated loan facilities for the first time, which had been introduced without enough preparation.
Rail firms are to receive £40 million in compensation, but the MPs identified other costs including the £4.3 million cost of inquiries and £2.7 million in legal fees.
The MPs said: “In our view, we cannot categorically rule out the possibility that officials manipulated the outcome of the competition not only to keep First Group in the running for as long as possible but to ensure that First got the contract.”
It was unclear why officials would be biased, the MPs said.
They added: “We recommend that the DfT find a way of undertaking a full email capture, reporting to someone suitably independent, to help get to the bottom of why DfT staff discriminated against Virgin and in favour of First Group during the Inter City West Coast franchise competition.”