Thoughts on politics and life from a liberal perspective

Wednesday, 3 October 2012

Small rail suppliers should also be reimbursed, not just the Big Boys

So Branson has got his way after all.

The franchising for the West Coast Main Line has been scrapped after "significant technical flaws" were discovered following a review by the Department for Transport.

This has to be viewed as a significant victory for the Virgin boss. He was very active in the media in the days following the initial announcement of the awarding of the franchise to First Group and it is almost certain these flaws would not have come to light had it not been for his campaign and the threat of legal action forcing the DfT to review its procedures.

According to Transport Secretary Patrick McLoughlin the estimated cost of reimbursing the four bidding companies will be £40m.

But what this fails to take into account is all the small companies within the supply chain for companies like First Group who will not be reimbursed for work undertaken as part of these bids.

A source has contacted me to say that there are numerous companies in this position, some of whom will have invested a substantial amount in these processes. At a time of economic difficulty when the rail industry is already essentially on its knees this could now be a blow from which some of them cannot recover, unless action is taken.

What makes it worse is that all the franchise competitions have been "paused" in the light of what has happened with the West Coast Main Line. This means the number of smaller companies affected will be even larger. They may now have to wait 6 months or longer before these processes restart. This sort of delay could easily be enough to put a number of them out of business.

I would encourage the government and Vince Cable in particular to look into this and ensure that no companies further down the supply-chain in this process are forced to pay the ultimate price for a situation not of their making.

Small companies are the life-blood of our economy as ministers repeatedly tell us. So the government should put their money where their mouths are and make sure that the incompetence of the Department for Transport does not kill off the very companies who will get us out of this recession.

1 comment:

It doesn't add up... said...

I'm not sure what you are really alluding to here. Any companies that did sub-contracted work in submitting the original bids will have been paid for that, and thereby been compensated. Any who signed up to do work in the event that a particular bid won were taking the risk that the bid would lose. They would have contracts that covered that situation. Companies that failed to consider the contingency of a bid failing are not worthy of support.

You need to be much clearer, rather than suggesting there are companies who should get a bail-out without providing a proper logic for it.