West Coast fiasco: Public rip-off was no surprise

There are far worse rail disasters than botching an 18-month procurement project - but as MPs found this week, the Whitehall fiasco over the West Coast Main Line's future was no less expensive.

Between compensating bidders' expenses, staffing costs, the legal fees for a then imminent court battle with spurned contractor Virgin Trains and the ensuing external reviews, the Commons' investigating public accounts committee pegged the total cost as "expected to be in excess of £50 million," not including starting the whole process from scratch.

For comparison, the Department for Transport's entire search and rescue budget currently amounts to just £38m. So how did the West Coast contract go so catastrophically wrong?

The first the public heard of it was in August, when the department announced it was ending Virgin Trains' 14-year run and handing the London-to-Edinburgh route to rival FirstGroup instead.

Virgin's army of lobbyists immediately went into overdrive, with its belligerent billionaire owner Richard Branson threatening legal action and insisting the department had "got their maths wrong."

You'd be forgiven for dismissing it as business as usual, but it turned out Branson was right - and if the MPs' findings are to be believed, the trouble began almost as soon as officials put it out for tender in January 2011.

As Labour's Margaret Hodge (pictured) put it, "There was no senior civil servant in the team responsible for the work, despite the critical importance of this multibillion-pound franchise.

"There was no single person responsible from beginning to end and, therefore, no-one who had to live with the consequences of bad policy decisions. For three months there was no single person in charge at all."

But not only were junior staffers left to themselves, they were largely barred from calling in the consultants, with just £1.9m spent on external advice when bidders were spending on average around five times that amount on their own sales pitches.

Flying solo, the inevitable errors then slipped through unchecked, the worst of which forgot to factor the rate of inflation into the winner's security deposit for a deal meant to last decades.

All of which begs the question of just why such a high-profile project was given such short shrift. And for that we must look back to Chancellor George Osborne's not-so-comprehensive spending review in 2010 - namely, the demand to claw back £300m from the department's budget by 2012.

Departmental heads acting on the Chancellor's orders promptly laid off some 400 junior staff and dozens of senior posts, including the director of procurement, the director of rail strategy and the director of rail contracts - all of which would have otherwise had a hand on the tiller.

The MPs' recommendations aren't rocket science - don't cut corners, check your sums before you start, don't delegate projects into oblivion - but they breeze past the double-bind that the Con-Dem cuts represent.

And most crucially, they fail to question the value of procurement itself when privatisation has so unequivocally failed to deliver an accessible public good.

Since the Tories broke up British Rail in 1995 the average fare has soared far above and beyond the government's preferred RPI measure of inflation.

RPI has risen by a total 66 per cent - but as Rail Magazine's Barry Doe recently discovered, the average peak-time single ticket from London to Leeds has shot up 159 per cent, to Birmingham by 177 per cent, to Glasgow by 160 per cent and to Manchester by a ludicrous 208 per cent.

Season tickets alone have roughly kept pace with inflation - but surprise, surprise, relatively few people can afford £1,000 up front. And the operators themselves admit the data for supposedly cheaper advance singles simply doesn't exist.

And that's just the user-pays element - the Transport for Quality of Life consultancy's Rebuilding Rail report last August found that public subsidies to Network Rail, the quango that oversees the actual infrastructure, dwarfed the premiums that operators pay back to the government.

Between 1990 and 1995, Britain's nationalised railways cost the public purse an average £2.4 billion a year.

But more than a decade into the glorious new era of efficient competition, the 2005-2010 period showed public spending had more than doubled, racking up an average £5.4bn a year.

Even after factoring in premiums, privatisation had cost an equivalent £1.2bn more every year than outright public ownership.

The West Coast clanger makes for snappy headlines, but the reality is that tinkering with the procurement process is at best fiddling at the margins.

Public policy went off the rails decades ago - and it'll take nothing less than full-scale renationalisation to get us back on track.