Posted 8th March 2013 | 8 Comments

New challenge for DfT as TOCs prepare to sue

THE DEPARTMENT FOR TRANSPORT is facing a new legal challenge, with four train operators reported to be claiming a total of some £40 million after the Great Western franchise competition was cancelled at the end of January.

Legal proceedings are now on the cards from FirstGroup, Stagecoach, Arriva and National Express, who were told that their bidding expenses of some £10 million apiece would not be refunded.

The transport secretary Patrick McLoughlin is relying on the small print of franchise bidding rules, which do not allow refunds, but the companies will claim that the circumstances are exceptional.

However, the matter may not move to the courtroom for some time, with the frustrated bidders now understood to be in talks with the DfT over a possible solution to their grievances.

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • Melvyn Windebank, Canvey Island, Essex

    Amir, Eastbourne You are living in the past business groups are far more attractive we only have to remember the success that came out of Network Southeast that brought together London local railways for the first time and with plans for Crossrail links just as privatisation dogma ruined things
    ,

    Inter city was also a successful brand which could still be recreated !

    While local networks like Merseyrail and Metrolink show how regional transit systems are better than everything controlled from London!

  • jak jay, leamington spa

    SSS is right re:BR and its funding what was it in the last full year?(2.3bn or so) The elephant in the room in the railway is 'Notwork Rail' if the Franchise system remains scrap this cash cow and give the TOCs the track and signalling,thus ending the buck passing that goes on,that way they have no excuse or get out when things go south i.e. the never ending 'signal problems' that occur on a daily basis.witness the fiasco @Loondon Waterloo when a 100amp fuse blew in a junction box and closed the whole route in and out of the station leaving thousands of punters stranded on trains without lights/heataing+SWT running round like headless chickens

  • Bob Grundy, Lancing

    Bidders knew the rules, if they say no refund that's what they get, period. In any case when the process is patched up and re-started and they re-submit, I can't believe the work done on cancelled bids will all have been wasted.

    Of course the legal profession will not let it be so simple, or they'd be deprived of their Rolls-Royces and villas on the Algarve. They're telling their clients that DfT will look so silly in court the case will go against them whatever its merits. Come to think, they could be right.

  • SSS, BASINGSTOKE

    a return to a 'public sector' operation would not be run by the dft, you would go back to a similar system like BR or pre privatisation sectorisation(NSE/Regional Railways etc), which did wonders for 'certain' areas (Chiltern/Thameslink for starters)
    If BR was given the sums of money that has gone to the private companies we would a gold plated railway.

    The only way forward is to scrap franchishing and run in sectors, with experienced management and plough all the money into the railway rather what happens currently


    'Amir of Eastbourne' The government do not run any rail company, DoR is a company in its own right, but all profit goes back to the Dft, since the DoR came in things have not imploded at East Coast, far from it, it has become a better company to a degree, nothing is perfect


  • Amir, Eastbourne

    Time to scrap the franchise system its not working and is a complete waste of taxpayers money! Make proper railway companies like the old big four.

    I propose Scotrail, London & North Eastern Railway (LNER), London & North Western Railway (LNWR), Great Eastern Railway (GER), Great Western Railway (GWR), Southwestern Railway (SWR) and Southern Railway (SR)

    If people think the government are so good at running a railway when they choose to run the system like this. Then one of these companies can be run by Directly Operated Railways and the rest can be floated on the London Stock exchange or sold off! We'll see who then is better.

  • Lutz, London

    @leslie burge, leicester
    This whole episode demonstrates that the railways are not safe in the hands of the public sector; it is no good having the lackluster pen-pushers running complex operations. You also seem to forget the £40M plus charge to OUR money due to public sector incompetence.

    I agree with Tim, the DfT should be made to pay for the operators costs, and I expect they will only avoid this because they are a public sector body.

  • leslie burge, leicester

    I wonder what sort of sweetener the government are dreaming up now.
    Better off without franchises swallowing all the profits and taking non of the risks.

  • Tim, Devon

    I have to agree with them. If they paid money to take part in a competition and the competition is cancelled completely they should get a refund. If they had simply lost because their bid wasn't the best then fair enough. If I bought a lottery ticket and the draw was cancelled I'd want my money back, even though I probably wouldn't have won anyway.

    Time to scrap the franchise system and move to open access for all.