The Government is expected to scrap the bidding competition for another major rail franchise, just months after it pulled the contract for the West Coast Main Line, costing the taxpayer more than £50m.
Bidders for the Great Western line are braced for an announcement on Thursday by the Department for Transport (DfT) that FirstGroup (LSE: FGP.L - news) , which currently runs the services connecting London to Bristol and Cardiff, has been awarded an extension to its contract.
A process had been started last year to re-let the 15-year franchise only for it to be suspended in the wake of the West Coast fiasco, which had seen Sir Richard Branson’s Virgin Rail Group controversially lose out to FirstGroup.
The whole competition for the Great Western Line is expected to be jetissoned, forcing the Government to reimburse - at huge expense to the taxpayer - the train companies that had bid for the contract.
An operating extension on the Great Western line would be a significant boost to FirstGroup after it was named as the winner of the West Coast competition in August - only to be denied the franchise two months later when the Government aborted the process, following the discovery of “significant technical flaws” in the way the process was handled.
The Government announced last March that, alongside FirstGroup, National Express (NYSE: EXPR - news) , Stagecoach, and Arriva (LSE: ARI.L - news) , a division of Deutsche Bahn, had been short-listed for the Great Western franchise.
However, the bidding process was suspended in October by Transport Secretary Patrick McLoughlin, along with two other franchise competitions to run Essex Thameside and Thameslink services.
The unprecedented move threw the rail franchising system into chaos, with nine major contracts due to expire by the end of 2014.
Awarding a new contract to run Great Western services is believed to be particularly problematic as the line is due to undergo a significant infrastructure upgrade, along with changes to some services and rolling stock.
Rail industry sources say the changes have made it difficult to accurately forecast future revenue and passenger numbers.
Changes are also expected to the Essex Thameside and Thameslink competitions, with sources raising the prospect that the latter could be run on a management contract rather than a long-term franchise.
The DfT would not comment other than to confirm that an announcement will be made on rail franchising today.
The news comes as transport ministers were blamed by MPs for a series of “irresponsible decisions” that led to the West Coast debacle.
Ultimate responsibility for the fiasco lies with Government ministers, who pressed ahead with a “complex” and “perhaps unworkable” franchising policy “in haste”, according to a committee of MPs.
A report from the Commons Transport Select Committee points the finger firmly at ministers, who have so far allowed DfT officials to shoulder most of the blame.
The select committee stops short of naming individual ministers but the findings put former Transport Secretary Justine Greening, her predecessor Philip Hammond and former Transport Minister Theresa Villiers in the frame.
Louise Ellman, chair of the transport committee, said: “Embarking on an ambitious - perhaps unachievable -reform of franchising, in haste, on the UK’s most complex piece of railway was an irresponsible decision for which ministers were ultimately responsible.”