First Class Partnerships, Indeed

Lucas Amin and Rob Evans write: 

The civil servant who awarded Southern its rail franchise made the decision to do so while owning a large share in a consultancy that had been advising the troubled operator’s parent company. 

Peter Wilkinson, who had been hired by the Department for Transport (DfT) to act as its franchising director, was involved in awarding the Southern, Thameslink and Great Northern franchises to Govia Thameslink Railway (GTR) in May 2014. 

At the time, he was a director and the joint main shareholder of First Class Partnerships, which he continued to be for 20 months after his hiring by the DfT in January 2013. 

Wilkinson had been managing the consultancy, which styled itself as “a leading rail industry boutique consultancy business”, since 2002, but stepped down when the government employed him as a contractor under an agreement with FCP.

Govia was a longstanding client of Wilkinson’s company and had been paying it for consultancy advice six months before the franchise was awarded. 

The government is paying Govia about £8.9bn over seven years to run the three-franchise network, which is the largest to date in terms of passenger numbers. 

Southern rail passengers have experienced months of strikes, delays and cancellations amid a long-running industrial dispute over the role of train guards. 

Drivers on the network are in the middle of three days of strikes this week, which will be followed by another three days of action later this month. 

Trade unions have accused Wilkinson, who retains a senior post at the DfT, of being the hatchet man driving the Southern rail dispute. 

He was forced to apologise after he told a public meeting last year “we have got to break” train drivers and warned that those who resisted government plans should “get the hell out of my industry”. 

In June 2014, while Wilkinson was franchising director, he was also involved in awarding a 15-year franchise, Essex Thameside, to National Express-owned c2c. 

The operator said it had paid for the services of FCP in the past, but not while Wilkinson was in charge of awarding franchises between January 2013 and October 2014. 

When asked to state the last time it used FCP, c2c did not respond.

Whitehall documents obtained by the Guardian under freedom of information legislation show that in January 2013, Wilkinson declared he was a director of FCP and owned shares in the company. 

He said he was “stepping aside from the firm for the duration of this DfT role”. 

He believed there was a “risk of perceived conflict of interest, but should not be one in practice”. 

In August 2014, however, DfT officials concluded that Wilkinson had a clear conflict of interest between his shares in FCP and his government work. 

After a discussion with the department’s ethics and propriety team, an official wrote that the arrangement in which he was seconded from FCP “feels very uncomfortable”. 

In October 2014, Wilkinson stepped down as a director of FCP and was forced to sell all his shares, cutting his ties with the consultancy. 

At that time, he had accepted another job at the DfT. 

He is paid £265,000 a year as the department’s managing director of rail passenger services, responsible for the national franchising strategy and all aspects of procurement. 

Wilkinson and the government also face questions about payments made by the DfT to FCP while he was franchising director. 

Official data shows that the DfT made 31 payments worth a total of £805,422 to FCP between February 2013 and October 2014. 

At least 12 of these payments, amounting to £356,535, related to what the department called “rail franchising”, the area of the ministry for which Wilkinson had responsibility. 

When Wilkinson was employed as a contractor between January 2013 and October 2014, the DfT said, his contract included strict procedures to prevent conflicts of interest, while FCP implemented measures to ensure that any conflicts of interest were avoided.  

The department said there were tight controls in place to prevent any conflict of interest when payments were made to FCP. 

A DfT spokesperson said: 

“The department regularly contracts and recruits people with relevant industry and commercial expertise, to help it achieve the best result for passengers and taxpayers. 

“We have robust safeguards to guard against any conflicts of interest. 

“Decisions on franchise awards are taken by the department following a fair and open competition. 

“Each franchise award is subject to thorough and independent audit.” 

Wilkinson did not comment. 

According to the DfT, Wilkinson was recruited after an open and fair competition to start work at short notice as franchising director, initially for six months, with the aim of kickstarting a faltering franchising programme.

According to the DfT, his long career in the rail industry had included work on the privatisation of British Rail and leading negotiations on both sides of franchising.

GTR said it had regularly employed the services of FCP since 2005 at an annual fee of about £18,000.

A spokeswoman said it had paid FCP more than £10,000 for general consultancy services between September and November 2013, adding “this would have been the time when we were working on our bid [for the franchise]”.

Govia is partly owned by France’s train operator, Keolis, which is 70% owned by the state railway company SNCF. FCP also lists Keolis as a client. 

The Guardian asked Keolis when it had used FCP, but the company declined to answer, saying: “We don’t comment on the detail of any commercial relationships.”

FCP said it could not answer questions about clients because it was bound by strict confidentiality.

“Our work is wide ranging and we have always maintained comprehensive confidentiality and conflict of interest processes with all our clients, in line with public procurement rules,” a spokesman said. 

After Wilkinson’s appointment as a permanent civil servant in October 2014, “he resigned from First Class Partnerships Ltd and our shareholders bought back his shares,” the spokesman added.

Wilkinson apologised for comments he made to a public meeting in south London organised by a Conservative MP to discuss the railways in February last year. 

He told the meeting: “Over the next three years, we’re going to be having punch-ups and we will see industrial action, and I want your support.”

He said train drivers were well paid.

“I’m furious about it and it has got to change – we have got to break them.

“They have all borrowed money to buy cars and got credit cards,” he said.

“They can’t afford to spend too long on strike and I will push them into that place.

“They will have to decide if they want to give a good service or get the hell out of my industry.”

Rob Evans and Lucas Amin add: 

The Labour party has called for an investigation into disclosures that the civil servant who awarded Southern its rail franchise did so while owning a large share in a consultancy that had been advising the troubled operator’s parent company.

Andy McDonald, the shadow transport secretary, said the disclosures by the Guardian “expose the murky world of rail franchising” and pressed for an investigation by the head of the civil service.

“It is clear that the relationship between the Department for Transport, private companies who profit from our railways, and lobbying and consultancy firms is uncomfortably close,” he said.

McDonald’s call for an investigation centres on Peter Wilkinson, who had been hired by the Department for Transport (DfT) to be its franchising director.

Wilkinson was involved in awarding the Southern, Thameslink and Great Northern franchises to Govia Thameslink Railway (GTR) in May 2014.

For 20 months after he was recruited to the department, he was a director and the joint main shareholder of First Class Partnerships (FCP), a transport consultancy he had been managing since 2002. He was employed by the DfT as a contractor under an agreement with FCP.

Govia had been a longstanding client of First Class Partnerships and had been paying it for advice six months before the franchise was awarded.

Whitehall documents show the DfT eventually concluded that Wilkinson had a clear conflict of interest between his shares in FCP and his government work as the arrangement in which he had been seconded from FCP “feels very uncomfortable”.

On Tuesday, McDonald said:

“For complete transparency it is essential that the secretary of state [for transport] refers these allegations to the head of the civil service so they can be investigated.

“Without a full and open investigation that addresses these alleged conflicts of interest in the awarding of the GTR franchise and other franchises, suspicions will remain about how these rail contracts are awarded.

“Passengers, taxpayers and stakeholders need answers if they are to have any confidence in our railways and how they are being run.”

Referring to Wilkinson, Louise Ellman, the Labour chair of the House of Commons transport select committee, said:

“There are unanswered questions about his role at the department.”

The DfT has said while Wilkinson worked as its interim franchising director between January 2013 and October 2014, there were strict procedures to prevent conflicts of interest, while FCP implemented measures to ensure that any conflicts of interest were avoided.

In a statement, a DfT spokesperson said:

“The department regularly contracts and recruits people with relevant industry and commercial expertise, to help it achieve the best result for passengers and taxpayers.

“We have robust safeguards to guard against any conflicts of interest.

“Decisions on franchise awards are taken by the department following a fair and open competition.

“Each franchise award is subject to thorough and independent audit.”

Since November 2014, Wilkinson has been the department’s managing director of rail passenger services on an annual salary of £265,000.

Trade unions allege he is “the hatchet man” driving the Southern rail dispute, after he told a public meeting that he and others wanted to “break” train drivers.

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