By Marcus Leach

Whilst Sir Richard Branson smugly says I told you so, the Government are left to wipe the egg of their faces and assess the full knock-on effects of the decision to make a last-minute U-turn in the West Coast Main Line rail deal.

Having originally awarded the contract to FirstGroup, rather than continuing with Branson's Virgin, the Government have now decided that the entire process should be rerun, and at no small cost either.

The only person who is happy right now is Branson, for it was he who said the Government were 'insane' to offer the contract to FirstGroup, and it seems they have realised this, for why else would there be a sudden change of heart, other than the threat of legal action from Branson?

It is still unclear what the significant technical flaws in the original process were that have prompted the rerun, although it is hoped that the two independent reviews into the debacle will shed further light.

In the meantime the Government will have to foot a £40 million bill for their inability to spot the 'significant flaws', although some scant consolation that they had the courage to hold their hands up and admit that they got it wrong in the first place.

But the decision goes further than just the obvious egg on face, it is one that could damage business and investor confidence, as John Cridland, Director General at the CBI explains.

“The West Coast Mainline is one of the country’s major transport arteries, the cancellation of the franchise process is likely to undermine business, investor and public confidence in the award of rail contracts," Cridland said.

“The Government is right to hold up its hands when mistakes have been made, but this illustrates the struggle it sometimes has with major procurements. An urgent focus is needed to improve its commercial skills and expertise so that this does not happen again, especially with several large franchises up for renewal over the next 18 months.

“Businesses need assurance that the bidding process is fair and robust, and results in the right outcome for passengers and freight carriers, with improved services and greater investment. Taxpayers will not tolerate another costly mistake.”

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