Oral statement to Parliament

Statement on West Coast Main Line and franchising

This speech was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

West Coast Main Line and rail franchising statement updating the House on progress.

Mr Speaker, with permission I would like to make a statement on the progress we are making to put right arrangements for the West Coast Main Line and rail franchising.

First, I will update the House on the Laidlaw Inquiry.

Second, I will explain how we will ensure not only continuity of service on the West Coast line after December 9 but an enhanced service.

On the 3 October I announced the cancellation of the competition to run the Inter-City West Coast franchise…

because of the discovery of unacceptable flaws in the procurement process run by the Department for Transport.

I made it clear at the time, and do so again today, that this was a very regrettable decision prompted by mistakes that should never have happened.

I also launched two independent inquiries, one of which has reported its interim findings to me and which I am today (29 October 2012) delivering to the House.

I asked the first inquiry, led by Centrica chief executive Sam Laidlaw, to look into what happened and why…

with the aim of establishing the lessons to be learned.

I also asked the second review, led by Eurostar chairman Richard Brown, to focus on any lessons to be learned for the future rail franchising programme.

I promised that both would conduct their investigations thoroughly, independently and urgently.

Mr Speaker, given the public interest in this matter the Laidlaw Inquiry was asked to deliver an interim report to me by the 26 October, and a final report by the end of November.

I am grateful to the Inquiry for meeting this first deadline, and working tirelessly to meet the second.

I stress that today’s (29 October 2012) findings are precisely that - an interim report. There is more work to do. These findings are clearly a first stage.

As Mr Laidlaw explains, they set out what went wrong, and from that basis he will now carry out further investigations into why this happened.

From the start, my aim in dealing with this situation has been to be open, and come forward with information for the House at the earliest opportunity.

It is in that spirit that I make this statement today.

In the interests of complete transparency, I am publishing this interim report, with its provisional findings, and placing copies of it in the libraries of both Houses.

To be blunt, these initial findings make uncomfortable reading but they provide a necessary and welcome further step in sorting this out.

The government will need to see the full and finished report before it can comment in detail on any conclusions.

This is crucial because of the independent nature of the Laidlaw Inquiry and the need for the government not to pre-judge its eventual findings.

But it is clear that the Inquiry has identified a number of issues which confirm that my decision to cancel the franchise competition was necessary.

These include…

a lack of transparency in the bidding process…

the fact that published guidance was not complied with when bids were being processed…

inconsistencies in the treatment of bidders…

and confirmation of technical flaws in the model used to calculate the amount of risk capital bidders were asked to provide to guard against the risk of default.

The Laidlaw Inquiry also mentions factors “that appear to have caused or contributed to the issues raised”.

We will look at these with interest and care, although once again we will need to see the final report before we can comment further.

Secondly, I would like to update the House on the progress we are making to ensure continuity of service on the West Coast Main Line once the current franchise expires on the 9 December.

As I have said previously, we will ensure that passengers continue to be served by the same trains, with the same frontline staff, the same services, using the same tickets…

and, I am pleased to say, enhanced future timetables.

The department is making good progress in its discussions with Virgin on how they will operate the line for a short period of up to 14 months while a competition is run for an interim agreement.

We are discussing their proposals for improved services over this period and an enhanced compensation scheme for delayed passengers.

In dealing with this, my department has been frank and open about its mistakes and is absolutely determined to find out exactly what happened.

In the meantime, we will keep delivering for passengers and continue with the unprecedented levels of investment in trains, stations and railway lines.

Combined with our decision to limit train fare rises to an average of inflation plus 1%, instead of RPI+3, for the next 3 years…

this demonstrates this government’s total commitment to Britain’s railways.

I commend this statement to the House.