03 October 2012

The scrapping of the West Coast Mainline franchise award goes to the heart of the Civil Service’s credibility and reputation for competence. At a time when relations between some ministers and some senior civil servants are already strained, the disclosures could hardly be more damaging. In many respects, this is more serious than the furore of five years ago when the apparently inadvertent loss of computer discs with child benefit records led to the resignation of Paul Gray as head of HMRC.

Of course, such incidents should not tarnish the whole Civil Service. There are many examples of high quality performance, improvement and commitment to reform across Whitehall, not least in the handling of the Olympics project by the Civil Service (to be discussed in a series of forthcoming Institute for Government events, and a report). But errors, particularly as costly and serious in their consequences as over the franchise, inevitably overshadow the successes in the media and public eye.

Philip Rutnam, the Transport Permanent Secretary, yesterday said the ‘deeply concerning’ errors show ‘a lack of good process and a lack of proper quality assurance’. Three civil servants have been suspended and a review is being conducted into what went wrong and lessons to be learnt. This is being overseen by two DfT non-executive directors, Sam Laidlaw of Centrica and Ed Smith, former PricewaterhouseCoopers strategy chairman. This represents a novel and correct use of non-execs as members of departmental boards in monitoring and ensuring administrative efficiency.

The flaws in the process emerged not when the franchise was being awarded, and then defended by ministers, but only when officials were preparing evidence for the judicial review brought by Virgin Trains. This underlines the growing importance of judicial review for major projects, and therefore the need for high levels of competence and professionalism in decision-making and, increasingly, in commissioning of services from the private sector.

Then there are the interlinked questions of accountability and responsibility, now being examined in a major Institute for Government inquiry. Who should be accountable and take the blame? Patrick McLoughlin performed the essentials yesterday in publicly admitting to the errors, taking immediate remedial action and establishing two inquiries. He put the blame ‘wholly and squarely’ with his own department, which he only took over a month ago. But who was responsible for apparently technical, though very important, questions of levels of risk, such as inflation and passenger numbers, in evaluating the bids? Was it just the three civil servants suspended? Which ministers and/or civil servants oversaw the decision making process and, hence, the key assessment of risks? It is the familiar question of who knew what when?

The risks now are obvious. Some ministers will feel even more justified in their criticisms of the Civil Service, now echoed more harshly by Tory MPs and on websites. Their understandable argument is that since we, ministers, have to be publicly accountable, more crudely to take the blame, then we should have a greater say both in the appointment of senior officials and in their appraisal, as Francis Maude set out in his speech at the Institute on Tuesday. Neither change would, however, have necessarily prevented the flaws in the franchise process.

There is a twofold challenge. First, for the permanent secretary and the departmental board, to demonstrate that there is a robust and transparent system of accountability, which leads both to the careers of responsible officials being affected, and the department being confident that it has learned lessons to prevent recurrence. The priority should be to strengthen the system. Second, Sir Jeremy Heywood and Sir Bob Kerslake, the joint leaders of the Civil Service, need to show, urgently and publicly, that the wide-ranging reform plan announced in June will improve performance in future.


Gus O'Donnell and others are using the West Coast debacle to argue that the Civil Service should pay more to attract people with commercial skills. But the most senior of the suspended civil servants is a former Goldman Sachs executive director, on a salary of around £140k per annum as corporate finance director at the DfT!

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