West Coast rail franchise fiasco is par for the course

You would think that with over £1 trillion of national debt, the government would start being rather more careful with our money! But apparently not, with yesterday’s revelation that the botched bidding process for the West coast rail franchise would cost taxpayers £50 million to repay the bidding costs of those taking part in the auction.

Three civil servants in the Department of Transport were suspended after awarding the contract to First Group over the current franchisee Virgin Railways, a partnership between Stagecoach and Virgin. The individuals concerned seem to have had a few spreadsheet problems and apparently miscalculated growth and risk assumptions behind First Group’s bid. After months of accusations from Richard Branson and Brian Souter that First Group’s bid didn’t make financial sense, the government suddenly did the u-turn yesterday and admitted the blunder. As well as the West Coast main line being re-examined, the Great Western, Essex Thameside and Thameslink franchise bid processes have also been suspended at further tax payer cost.

But, the Department of Transport isn’t the first government department to cock up on a monumental scale. That prize goes to the Department of Health which managed to spend £12.7 billion on the NHS IT project which was ultimately canned in September 2011 without a functioning system. In the end the Coalition threw in the towel after 15 years of failed attempts to make it actually work. The wasted money was estimated to be enough to pay the Nurses wage bill for a decade!

They never learn!

Contrarian Investor UK