West Coast Main Line: Pay civil servants more, says O'Donnell

Whitehall must pay more to attract the best civil servants, Lord O'Donnell has said, after three were suspended over the West Coast Main Line bid process.

The ex-head of the civil service told BBC Radio 4's Today programme there were skills shortages in areas where the private sector paid "vastly more".

The award of the West Coast franchise to FirstGroup has been scrapped because of bidding process "flaws".

Lord O'Donnell also said ministers were wrong to criticise civil servants.

The three civil servants - who face possible further disciplinary action pending an investigation - have been suspended after the government admitted major failings over the contract to run the rail line.

Transport Secretary Patrick McLoughlin said a "terrible mistake" in evaluating the relative merits of four bids had been made by Department for Transport staff and the "fault lies wholly and squarely" with it.

Staff reportedly failed to include predicted passenger numbers and inflation forecasts in some of the risk assessments of the rival bids from firms.

They included Sir Richard Branson's Virgin Trains that currently runs the route, which links London with Glasgow and Edinburgh via the Midlands and north-west of England.

Mr McLoughlin said the estimated cost of reimbursing the four companies for the cost of their bids would be £40m.

Lord O'Donnell, who retired as cabinet secretary after the coalition came to power, said the debacle "does raise some issues about skills in the civil service".

"There are civil servants up and down the country doing great jobs, but we are suffering in some areas where there are skills shortages - in the commissioning area, in the procurement area," he said.

Some "hard-headed commercial procurement" staff were being lured away by bigger salaries in the private sector, he added.

He said paying bigger salaries in the civil service was "part of the answer and we should be prepared to do that" but added that "having an arbitrary constraint like the prime minister's salary isn't helpful".

The Public and Commercial Services union, which represents one of the suspended men, said it would ensure the inquiry examined all the issues, including ministerial involvement and oversight of the bidding process.

General secretary Mark Serwotka said: "The way ministers have sought to blame civil servants in the Department for Transport before any of the facts have been established has been deplorable, but sadly not out of character.

"It is entirely consistent with the way the civil service is being treated by many ministers as an irritation, rather than as a professional body that works to ensure the smooth running of government."

Labour MP Margaret Hodge, chairwoman of the Commons Public Accounts Committee, said the affair was "yet another example... of where the civil servants themselves have not really captured and taken on the role that is expected of them in today's society".

She told Today: "People came into the civil service in the past because they were interested in policy, they wanted to devise policy.

"Today, the job of a civil servant is much more about delivering programmes, and that requires a different set of skills."

Peter Riddell, director of the Institute for Government think tank, said "errors" in the civil service "particularly as costly and serious in their consequences as over the franchise, inevitably overshadow the successes".

"At a time when relations between some ministers and some senior civil servants are already strained, the disclosures could hardly be more damaging," he added.

The Cabinet Office has said it has already laid out proposals to improve procurement and project management in a civil service reform plan published in the summer.

A spokesman said actions "already under way since the launch of this plan mean the civil service will be more commercially and digitally capable".

"We know that this kind of reform requires culture change across Whitehall," he added.

"The demand for change isn't just coming from ministers - it comes from civil servants themselves, many of whom have told us of their daily frustrations with a culture that can be overly bureaucratic, hierarchical and too focused on process not outcomes."

Lord O'Donnell's successor as head of the civil service, Sir Bob Kerslake, wrote on Twitter: "Tough headlines for the civil service today. Clear errors made on West Coast franchise. Need to learn lessons from this for the future."

Meanwhile, Scotland's transport secretary has hit out at the handling of the franchise, saying the Scottish Government had been given no notice of the decision to scrap the FirstGroup deal.

In a statement at the Scottish Parliament, Keith Brown said: "The department's handling of the procurement process has been incompetent and shambolic. Most importantly, it has caused a great deal of confusion and speculation about arrangements for West Coast services after the franchise handover date of 9 December."

He said the Scottish government would be keeping a close eye on assurances which had been given by the Department of Transport that services would not be affected.