Train companies in £40m legal action against the Government
The Government could face a £40 million bill after four train companies launched legal action over its decision to cancel competition for the Great Western franchise.
Ministers scrapped the bidding process for the contract to run inter-city services from London to Penzance, as well as South West branch lines, in January saying longer-term proposals would be outlined in the spring.
However, it has now emerged that the four bidders – FirstGroup, Stagecoach, Arriva and National Express – have lodged court papers in a bid to recover their costs. Each is thought to have spent some £10 million on the process, which was sent into a spin after the flawed awarding of the West Coast Main Line franchise.
A spokesman for FirstGroup, parent company of current operator First Great Western (FGW), confirmed yesterday: "In keeping with the other bidders, FirstGroup has made a protective court filing for the purpose of protecting its position with respect to the reimbursement of bid costs for the cancelled Greater Western franchise competition.
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"We have agreed to stay these proceedings to allow the Department for Transport (DfT) sufficient time to respond to the bidders and, for the bidders to then consider the DfT's response.
"This protective action has no bearing on any other discussions that are ongoing between the DfT and the company."
The bidding phase had been sparked following the decision by FGW to exercise an escape-clause in its existing deal three years early, saving a reported £800 million in payments.
The franchise hiatus, however, has resulted in First Great Western having its contract extended from April until October.
Ministers are reportedly desperate for the firm to accept a new two-year contract from then, giving it greater breathing room.
Fears have been voiced that the region has been "left in the limbo" with any short-term deal failing to address issues of over-crowding and punctuality.
The contract chaos dates back to the Government's announcement that First Group had beaten Virgin Trains to the £5 billion West Coast Main Line franchise.
It then backtracked, ditching the decision after the discovery of "significant technical flaws". As a result, three franchise competitions – including Great Western – have been re-started.
While the bidders in the failed West Coast Main Line run-off are being compensated, Transport Secretary Patrick McLoughlin said Great Western competitors were "responsible for their own costs" and that it would not be appropriate to reimburse their expenditure.
A DfT spokesman said: "We are aware that the Great Western bidders have issued claims in relation to their Great Western bid costs to protect their position for legal reasons.
"The parties anticipate that a stay will be agreed on these proceedings to allow the department sufficient time to respond to detailed letters received from the bidders last week and for the bidders to then consider the department's response."