Franchise fiasco bill 'could grow'

The bill for taxpayers from the West Coast rail franchise fiasco could grow, MPs have been told.

The public already faces paying out about £49 million following the scrapping of the West Coast bidding process over Department for Transport (DfT) faults.

Facing angry MPs at a select committee hearing, DfT's Permanent Secretary Philip Rutnam gave details of further costs. And asked if there would be further calls on the public purse, he replied: "I can't say there won't be."

There were stormy scenes as Mr Rutnam and his department's corporate director general Clare Moriarty appeared before the House of Commons Public Accounts Committee.

Amid fierce questioning both were forced to defend the department, which had originally awarded a new 13-year West Coast franchise not to Sir Richard Branson's company Virgin Trains but to rival transport company FirstGroup.

After Sir Richard launched a legal challenge to the decision, Transport Secretary Patrick McLoughlin scrapped the bidding process in October saying that the DfT had made serious mistakes in the bidding process. These centred on the subordinated loan facility (SLF) - the amount of risk money each bidder offered in the event of defaulting on the franchise.

Mr McLoughlin has already said that taxpayers' bill for repaying the bidders for their bidding costs would amount to about £40 million, while the National Audit Office has identified a further £8.9 million.

Mr Rutnam told the committee of further costs of around £6 million, including £5 for FirstGroup's now-scrapped plans to take over the West Coast line in December this year.

Mr McLoughlin has been extremely critical of his department officials, three of whom were suspended when the franchise bidding was scrapped. The department has also been severely criticised in a report by businessman Sam Laidlaw, who was asked to look into the fiasco by Mr McLoughlin and also castigated in a report last week by the National Audit Office.

Mr Rutnam told the committee that he had "started disciplinary proceedings in relation to a number of individuals" following his receipt of the department's own report into the West Coast bidding. Mr Rutnam would not say how many individuals were involved and added that the report would not be published.