This could be the civil service's expenses-gate. Its Lehman moment. Its hacking crisis.

By Tim Montgomerie
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This morning's Times is estimating (£) that the rail franchise fiasco may end up costing £300 million. As Pete reported yesterday errors by civil servants forced the new Transport Secretary into a "calamitous" climb down. It seems that auditors from PriceWaterhouseCoopers were called in by Justine Greening one week before the reshuffle. Those auditors discovered that officials hadn't properly accounted for inflation in their decision to award the West Coast Mainline to FirstGroup rather than Sir Richard Branson's Virgin Trains. It sounds like an error as basic as it was enormous. Even Sue Cameron - the civil service's representative on Fleet Street - concedes this morning that mandarins have committed a massive blunder but her solution is to call for a declaration of peace between ministers and civil servants. Her sources in Whitehall clearly fear that reformers like Francis Maude will see this an opportunity for fundamental reorganisation of Whitehall.

The Government should certainly see this episode as a short-term embarrassment for transport ministers but, much more importantly, a great opportunity to get a much better Whitehall machine. Episode after episode is shouting the same message. We have a civil service not fit for purpose. It can't run IT projects. It can't keep costs under control. Whether it's Treasury officials versus IDS or the education blob against Michael Gove large parts of the civil service actively work with outside vested interest groups against ministers and declared policy. When civil servants mess up they don't get fired they get moved.

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The Government's calamitous climb-down over the West Coast Main Line deal

By Peter Hoskin
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The word “shambles”, particularly with the prefix “omni-” in front of it, has been overused recently. But it’s the word that most readily applies to today’s news that the government is to scrap the deal awarding the West Coast Main Line franchise to Firstgroup. And the reason why? In the words of Patrick McLoughlin, “completely unacceptable mistakes made by my department in the way it managed the process”. Apparently, as the Department for Transport press release puts it, “These flaws stem from the way the level of risk in the bids was evaluated.”

The fiscal cost to the DfT is, as these things go, quite small: £40 million will have to be reimbursed to the various parties in the deal. But the embarrassment is huge. It was only a few weeks ago that the then Transport Secretary, Justine Greening, was deflecting Richard Branson’s concerns with the words, “I suspect that, had [Virgin] won the bid, they would have been perfectly happy with the process.” Yet now the Virgin Boss has been broadly vindicated. Thanks to errors committed along Whitehall, Virgin is now back in with a shot at the contract. FirstGroup’s shares have plummeted in price.

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New Transport Secretary Patrick McLoughlin insists he is "open-minded" about third Heathrow runway

By Matthew Barrett
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Until the reshuffle, Patrick McLoughlin had been a whip for 15 years, serving six leaders, and two Prime Ministers - which explains why his media appearances have been few and far between. In his first big interview since being appointed Secretary of State for Transport, Mr McLoughlin has denied being appointed simply to see a third runway through, and insists he is "open-minded".

The first point of interest in Mr McLoughlin's interview with the Evening Standard is the news that Boris Johnson's omnipresence continues - he has seemingly extended his powers over transport in London:

"He has already had London’s Mayor lobbying him. “I was talking to him this morning and we agreed to set up a working party between the department and the Mayor to look at some of the transport issues he wants to develop. So, I look forward to having a good relationship with Boris.” Officials from City Hall and the Department of Transport will meet regularly under the plan, giving the Mayor a formal input into the Whitehall machine, though it is not the devolution that Mr Johnson really wants."

The second, and major, point of interest is his declaration of being open to different options for airport expansion:

"Mr McLoughlin insists he is open-minded and asks people to trust the independent commission headed by Sir Howard Davies, set up to review aviation policy. “I’m not going to say what it should do. But I hope people will see it as a very serious piece of work. It will look at all the options, be it Boris’s scheme, the Foster scheme, and others, and hopefully people will come to accept and respect it.”"

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68% of Tory members think Cameron is getting ready to U-turn on Heathrow third runway

By Tim Montgomerie
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The issue of a third runway at London Heathrow is not just an issue of growth policy, it's about the PM's honour and credibility. Opposition to a third runway wasn't buried in the small print of the Tory manifesto. It was very clear we wouldn't build one. Cameron himself was clearer. "No ifs, no buts, no third runway", he said. It seems pretty clear, however, that the Government is at least considering a new position but not until the next parliament. After moaning at Labour's tendency to appoint a new Transport Secretary once-every-year, on average, Mr Cameron has moved Justine Greening after less than 12 months in the post. By 68% to 14% Tory members in the latest ConHome poll agreed that “Justine Greening lost her job as Transport Secretary because the leadership is getting ready to U-turn on its policy towards a third runway at Heathrow.” I should imagine voters in the dozen or so seats where Heathrow is a decisive issue will have drawn similar conclusions.

In an article for this afternoon's Comment is free Zac Goldsmith puts another marker down. "If there is a pre-election U-turn," he writes, "my colleagues will struggle at the next election to persuade voters that their manifesto is worth the paper it's written on."

There won't, I suspect, be a "pre-election U-turn", My guess is that the Tory commitment in the next manifesto will be to honour the Howard Davies review into aviation policy, which reports AFTER the general election. I can't see Zac Goldsmith and other Tory MPs under the Heathrow flightpath thinking that's enough. I also can think of a charismatic mayor who won't be happy either.

The tentacles of the Octopus Chancellor are all over this reshuffle

By Paul Goodman
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George Osborne wanted to move Iain Duncan Smith from Work and Pensions, and failed.  Ken Clarke was moved to take up a roving economic brief, thus gaining a licence to meddle in the Chancellor's affairs.  The reshuffle even brought some distressing family news: Lord Howell, Mr Osborne's father in law, has been moved from his Foreign Office job to make way for Sayeeda Warsi.  The Chancellor must steel himself for some lengthy familial exchanges about how difficult the post will be for a tyro.  And David Cameron's transport gambit provoked a blast of the trumpet from Mr Osborne's leadership rival, Boris Johnson.

No wonder the Chancellor was written up as a loser from yesterday's events. But this broad assessment is undermined by the reshuffle's details.  Mr Osborne has been portrayed on this site and elsewhere as the Submarine Chancellor, surfacing only to make carefully controlled interventions before plunging back into the depths of the Treasury.  Something about him clearly attracts marine metaphors, since he can also be imagined as an octopus, with tentacles reaching out to manipulate even the more obscure parts of Westminster and Whitehall.  Yesterday's moves saw them extended even further. Consider:

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A warning for David Cameron - Tim Yeo dismisses him as a footling Old Etonian over Heathrow

By Paul Goodman
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Tim Yeo, Chairman of the Climate Change Select Committee, once a Heathrow third runway opponent but now a Heathrow third runway supporter, has written a piece in the Daily Telegraph today about his view.  In a sentence, it is that the new EU cap on emissions should end environmental objections to Heathrow expansion, since "airlines will fly their newest and quietest aircraft" there in consequence. "Indeed," he writes, "we could cover the whole of Surrey with runways and not increase emissions by a single kilogram".

I agree with Tim Montgomerie that manifesto commitments should be honoured in all but exceptional circumstances, and the Government is in any case bound by the wording of the Coalition Agreement (as well as, more practicably, by the objections of the Liberal Democrats).  I suspect that the Boris Island scheme is the best long-term option for Britain.  But whatever Ministers resolve, they must act fast.  A decision can't be postponed forever - not, at any rate, without damage to Ministers' reputations and, far worse, Britain's competitiveness.

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We made a silly promise not to build a third runway for Heathrow but it was a promise

By Tim Montgomerie
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I don't primarily see aircraft as sources of pollution or noisy machines. I see them as our connection to overseas markets and overseas markets' connection to us. I also see them as the route to a guaranteed sunshiney holiday for a tired out family, yearning for a break. I see them as essential to Britain's economic competitiveness.

If I lived under the Heathrow flightpath I might feel differently (although aircraft are, thankfully, becoming quieter (and more fuel efficient)) but I think the Conservative Party was wrong to oppose a third runway at the UK's hub airport in our 2010 manifesto. But we did. Here's the clear and unambiguous wording:

"Our goal is to make Heathrow airport better, not bigger. We will stop the third runway and instead link Heathrow directly to our high speed rail network, providing an alternative to thousands of flights. In addition, we will: block plans for second runways at Stansted and Gatwick".*

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The next Coalition u-turn on the horizon: rail fare increases?

By Matthew Barrett
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Update 1.15pm

Adding to the sense of Tory discontent with the Government's rail fare increases, Priti Patel MP said on Sky News today that she wants Ministers to "do more" to help the situation:

"Our commuters are paying a lot of money to commute to work and they’re getting a poor deal off the back of this. And actually I’d like to see out Ministers do more, they are doing a great deal a lot already, but do more to put feet to fire when it comes to some of these train operating companies, some of these franchisees on these lines, to deliver a good service for our commuters and bang for buck."

**

The Observer has news of the next possible Coalition split: rail fares. It's not Lib Dems and Tory frontbenchers against the Tory backbenches, nor is it Tory front and backbenches against Lib Dems: it's Lib Dems and Tory backbenchers against the Government. 

The newspaper reports that MPs from both parties will lobby George Osborne and the Transport Secretary, Justine Greening, to cap fare increases at 1% above inflation, instead of the 3%+ increase that many fares will rise by in January. The first 1% goes to the rail companies, but the 2% (or more in some cases) of the 3% increase will go to the Treasury (effectively imposing a tax), hence George Osborne is said to be unwilling to u-turn on the steep increase. Justine Greening, on the other hand, is said to be sympathetic to the MPs. In last year's Autumn Statement, Tory MPs were able to secure the 1% they now seek again.

It is worth noting the MPs who are quoted complaining about the increase. Firstly, one representing a stereotypically prosperous Tory constituency, and one with plenty of commuters:

"One Kent MP – Sir John Stanley, the member for Tonbridge and Malling – accused ministers of "exploiting commuters" and using rail fares as "a disguised form of taxation"."

Another of the three Tory MPs quoted is from a more working class constituency, albeit still in the South East and with plenty of commuters:

"Tracey Crouch, the Tory MP for Chatham and Aylesford in Kent, said: "A lot of Tory MPs will be seeking meetings with ministers as soon as we return. Household living standards are already squeezed and people who have to commute are feeling very aggrieved.""

And the other Tory MP quoted represents an Essex Man-style swing seat:

"The Conservative MP for Harlow in Essex, Robert Halfon, said: "I have already written to Justine Greening. It is a simple cost-of-living issue. Many people in my constituency are on below-average earnings and commute into London, and they cannot afford these rises.""

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We aren't nearly angry enough about Labour's failure to invest in our railways (airports, roads, energy capacity...)

By Tim Montgomerie
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Over the last 24 to 48 hours news about railway fares and franchises has seemed gloomy. We've had passenger protests at stations and Richard Branson forecasting doom and gloom after his Virgin Trains outfit lost the west coast contract.

In reality the railways could be a good big picture story for the Coalition. If the party leadership adopts a compelling economic renewal narrative (see me and Bruce Anderson on this subject) the rail revolution could be a powerful substantiation of it. The Government is, after all, undertaking the biggest investment in our railways since Victorian times. £18 billion will be invested in this savings review, according to Department for Transport figures, and another £9 billion from 2014 to 2019. Plenty of Tory politicians are celebrating rail investments in their backyard that are being delivered by the Coalition:

• Boris Johnson, for example, campaigned strongly on the delivery of the Crossrail and Thameslink projects for London. Crossrail is the biggest construction project in Europe.
• And it's far from just London. Talk to MPs like Stuart Andrew, Paul Maynard, Eric Ollerenshaw and Alec Shelbrooke. They've been leading voices for the Northern hub investment that will see much improved connectivity between key northern cities including Leeds, Liverpool and Manchester.
• Phillip Hollobone and Nicky Morgan campaigned hard (and successfully) for the electrification of the Midland Mainline, connecting the East Midlands and South Yorkshire, notably Sheffield.
• Cheryl Gillan helped win the electrification of the line to South Wales, including the Cardiff Valley commuter lines.

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Wiggo wants bike helmets to be compulsory. Department of Transport says "no".

By Tim Montgomerie
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Cameron holds but doesn't wear his helmet

Cycle safety might be about to become a political hot potato.

Hours after Bradley Wiggins became the most medalled* Olympian in British history a less celebrated cyclist was killed when they went underneath the wheels of a shuttle bus, apparently transporting athletes from the village to events in Stratford Park. An issue that hasn't yet gained parliamentary traction might now do so after Mr Wiggins called for the wearing of cycle helmets to become compulsory. “Ultimately, if you get knocked off and you don’t have a helmet on, then you can’t argue,” he said. “You can get killed if you don’t have a helmet on.” He also urged cyclists to not use MP3 players or mobile phones when on the roads (image of Boris breaking both of Winggins' rules).

A spokesman for the Department of Transport issued this statement:

"We take the issue of cycle safety extremely seriously and are working to reduce the instances of deaths and serious injuries of cyclists on our roads. We encourage cyclists – especially children – to wear helmets to protect them if they have a crash. However, we believe this should remain a matter of individual choice rather than imposing additional rules which would be difficult to enforce. We also want to see more innovative measures being put in place to improve cycle safety.  That is why we have made it easier for councils to install Trixi mirrors to make cyclists more visible to drivers as well as announcing an additional £30 million for better cycle routes and facilties.  We have also committed £11 million per year for Bikeability training to help a new generation of cyclists gain the skills and knowledge they need to cycle on the roads.”

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