Four rail firms today have started legal action against the government over the cancelling of the Great Western rail franchise. We answer five questions on the current legal proceedings.
Which train companies are taking the government to court?
FirstGroup, Stagecoach, Arriva and National Express have all gone to court in a bid to claim compensation from the government.
What exactly do they want compensation for?
In January, the government cancelled the Great Western bidding process after it said it wanted to revaluate it after the collapse of the West Coast mainline a few months before.
Cancellation of the bidding process was a big blow for the train companies who would have spent about £10m on the process, hiring large teams of experts and lawyers to put together their bids.
How much could the train companies get as a pay out?
It is believed it could cost the government about £40m.
However, the BBC are reporting that a ‘stay’ period has been established in the legal proceedings until the end of March allowing both sides to come to a compromise.
Ministers are currently compensating bidders who lost out on a defunct West Coast deal.
What are industry insiders saying?
Nigel Harris, the editor of Rail Magazine, speaking to the BBC said: “A refusal to refund may conform to the letter of the contract rules but utterly fails the ‘right thing’ test.
“It makes no sense to penalise innocent bidders – especially when you want and need them to re-bid.”
However, lawyer Patrick Twist at Pinsent Masons told the BBC:
“By lodging papers with the High Court the bidders are keeping open their ability to pursue the Department for Transport for the costs they wasted on bidding for the cancelled Greater Western franchise procurement,” he said.
“The department will strongly resist any claim and the same bidders will have the opportunity to rebid when the franchise is reprocured. So it would be surprising if this really does lead to litigation.”
What is the government saying?
The government has come under increasing flak for messing up the process, which they have already spent £50m on.
Here is what Transport Secretary Patrick McLoughlin said earlier in the year: “In keeping with the relevant invitations to tender, which made clear that bidders are responsible for their own costs, the secretary of state does not believe it would be appropriate to reimburse bidders.”