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We’ve just lost £40m – how much was your share?

Incompetent government employees have just cost the UK £40m. That’s quite a bit more than I earn, yet as a taxpayer I have had to contribute to this waste of money. This is because of mistakes made in awarding the West Coast Main Line rail franchise to First Group, rather than the incumbents, Virgin Trains.

Time to write off £40m and start again

Our new Transport Secretary, Patrick McLoughlin, has only been in place for three weeks, but has had to start his new role by apologising for mistakes made by his department in assessing the bidding process for the franchise, which went on over a period of 15 months.

Mr McLoughlin was at pains to point out that neither of the companies bidding for the franchise had done anything wrong. He said: “A detailed examination by my officials into what happened has revealed these flaws, and means it is no longer acceptable to award a new franchise on the basis of the competition hat was held.”

He also said that: The “fault lies wholly and squarely with the Department of Transport” and that the mistakes were “deeply regrettable”.

But this begs the question, just how much money is being wasted by government departments? And, can we ever expect the same rigorous oversight of taxpayers’ money by civil servants, as we would expect from employees in a profit-maximising company. I know that we have seen one or two rogue traders in the banking sector that have dropped under the radar as they squandered hundreds of millions, but for most of us in private business we cannot afford to make mistakes.

In 2010, the owner of Topshop, Sir Philip Green, was asked to make a review of government spending. He said that between £600m and £700m could be saved on the government’s £2bn bill for telecoms alone. He concluded that the government could save billions of pounds a year and said: “The process is shocking. There’s no reporting, there’s no accountability.”

And, earlier this year, the National Audit Office found widespread waste in welfare schemes, capital projects and farm payments. It found that £31bn had been wasted by government departments in the previous two years. That’s 31 followed by a lot of zeros!

In response, Margaret Hodge, chairman of the Public Accounts Committee, told The Times that civil servants lack the management skills to ensure the public get value-for-money when negotiating contracts with the private sector.  She said: “I think we get ripped off too often because we don’t have appropriate skills and people don’t think money.”

This is a terrible indictment of a wasteful system, which is still squandering our money.

There are still around another 15 rail franchises which have to be sorted out before 2015. Anyone want to buy a railway?

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