WCML franchise fiasco lessons for HS2

Earlier today, the Public Accounts Committee published their report into the cancellation of the West Coast Main Line franchise competition.  The franchise was cancelled last October, with late night phone calls from the Secretary of State for Transport, to the head of Virgin on the eve of their judicial review.

The report highlights a number of significant flaws in the franchise process and also makes several references to HS2, highlighting that the some of the fundamental problems in the organisation of the Department for Transport may also affect HS2.

Margeret Hodge, chair of the committee said,
“Given that the Department got it so wrong over this competition, we must feel concern over how properly it will handle future projects, including HS2 and Thameslink. The Department needs to get its house in order and put basic principles and practices at the heart of what it does, with an appropriately qualified and senior person in charge of the project throughout and an accessible leadership team ready and willing to hear and act on warning signs.”

The PAC website says:
The Intercity West Coast competition failed because the Department did not get basic processes right and had failed to learn from mistakes made in previous projects. Recommendations made in our 2010 report ‘The failure of Metronet‘ to prevent a lack of oversight and information were clearly not applied in this competition. We are concerned the Department could yet again fail to apply basic processes, which could affect its future projects, including HS2 and Thameslink.

In addition, the report has other comments relevant to the debates over HS2.

It says
“We asked what the Department’s senior management, through the committees which
approved the decision to award the contract to First Group, had done to confirm that its bid was deliverable. This is because we were concerned that the Department was seduced by its technical models rather than using common sense to question whether the passenger growth forecast by First Group was too good to be true.”

Clearly this has to flag up a potential problem with HS2 – many people, including Stop HS2, have argued that the passenger demand forecasts used by HS2 Ltd are far too optimistic and don’t use the latest Web-Tag guidance.  But if the passenger numbers aren’t as high as HS2 Ltd claim, then the benefit-cost ratio will fall to the point where HS2 fails all the value for money tests.

Penny Gaines, chair of Stop HS2 said,
“The Public Accounts Committee say the Department for Transport need to learn lessons for HS2 and Thamselink from the WCML franchise fiasco.  But rather than reflect on this, the Department for Transport have been pushing ahead with their pet HS2 white elephant.  When Patrick McLouglin recently started talking publicly about an HS2 paving bill, he would have been well aware of what the PAC report was going to be critical of the Dft, and yet his response was to find more ways of getting more money from the taxpayer for HS2.  This is on top of the £50 million that the franchise fiasco has cost the British taxpayer.”

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