How DfT picked up the pieces from crisis of failed West Coast rail franchise award
Former transport secretary Patrick McLoughlin says collapse of contract “was a big mistake” but prompted review of rail franchise system
Former transport secretary Patrick McLoughlin has said the collapse of the West Coast rail franchise award in 2012 following errors in the Department for Transport was “a big mistake”, but added that the department responded well to the problems.
Reflecting on the fiasco in the Institute for Government's Minsters Reflect series, McLoughlin revealed that it first became apparent there were problems with the contract award when the DfT's legal counsel Christopher Muttukumaru warned him with then permanent secretary Philip Rutnam.
Rights to run trains on the London-Glasgow line for 13 years were awarded to First Group in August 2012 but the deal was cancelled in October that year after flaws in the procurement process were discovered.
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McLoughlin told the IfG’s Daniel Thornton that he first became aware of the issue when Muttukumaru and Rutnam said: “Look, we are finding a few problems with this, but we’re not sure whether it is serious yet.”
McLoughlin, who served as transport secretary from 2012 to 2016 and was also government chief whip from 2010 to 2012. said he had to warn then prime minister David Cameron that this was a potential issue.
Cameron was unhappy because he had asked for reassurance over the process. “There had been, over the whole summer, questions as to whether this was going to be alright or not and he’d been reassured by the cabinet secretary [Sir Jeremy Heywood] that it was okay,” he added.
The view was reached that the contract was unsafe ahead of a court bid by Virgin to challenge the award, and McLoughlin recalled having to make the announcement in the three-week parliamentary recess for party conferences.
“The problem was, when do we announce it? We were due in court and it was [then Labour leader] Ed Miliband’s party conference speech. We thought, we can’t have it on this day or that, or else we’ll be in trouble for that.
“So it was actually midnight that night after he made his speech that I was in the office ringing people like [First Group chief executive] Tim O’Toole and [Virgin Group founder] Richard Branson, telling them we would be making this announcement at 7 o’clock the next morning.”
Asked by Thornton how the mistake impacted his view of the civil service, McLoughlin said it was “a big mistake”, but he recalls select committees questioning if the department was fit for purpose, which he thought was unfair.
“They were quite robustly rubbishing the whole department and I was saying: “Hold on, this not the whole department. Yes, mistakes have been made and we’ve got these wrong and we’re going to put those right.”
Two subsequent reviews were undertaken – an examination by the DfT’s then lead non-executive director Sam Laidlaw looking at the department’s processes and one by former Eurostar chief Richard Brown on the future of franchising.
Asked if he felt the department responsed well, McLoughlin said: “To the crisis, yes. We got something wrong, there were mistakes made. I don’t want to go into too much detail about that, because that was dealt with by the civil service.
“The West Coast has become a bit of a famous story in the civil service and what happened? A few people were moved, lost their jobs and we picked up the pieces and we moved on. But that was one area that had gone wrong.”
He said that although there were “sometimes one or two people who would try to pull the wool over your eyes” in the civil service, officials were incredibly good and had responded to issues that he wanted to take up.
His key piece of advice for politicians working with civil servants is to “respect them”.
He added: “Make sure that you’ve got a very good relationship with your permanent secretary. But respect the independence and sincerity of the civil servants, and of the civil service."
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