David Cameron 'extremely angry' over rail franchise errors

David Cameron has said he is "extremely angry and apologetic" for the government's mistakes over its handling of the West Coast rail contract.

The prime minister said No 10 had done "all it could" to check that decisions had been taken properly but that "technical errors" had gone undetected.

Those responsible for the mistakes would be held to account, he promised.

Ahead of the Conservative conference, he also defended government efforts to boost job creation and housebuilding.

Mr Cameron has been on the back foot in the run-up to the autumn conference which starts on Sunday, with the rail franchise row - in addition to concerns over the economy and the direction of the coalition - increasing the pressure on No 10.

The decision to rerun the franchise process after the Department for Transport admitted it had made mistakes in how it evaluated the bids will cost the taxpayer at least £40m in compensation and experts believe the eventual bill will be far higher.

"I am extremely angry about what has happened, very apologetic that this has happened," Mr Cameron told the BBC.

The prime minister said that when Virgin Rail launched its legal challenge to the decision to award the franchise to rival First Group, he asked the cabinet secretary to examine how the process had been conducted.

"I think in terms of what No 10 did, we did all we could to check that decisions were being properly made," he said.

"We didn't pick up on this technical fault in the way that the franchise operation was run."

Three civil servants involved in the process have been suspended pending an investigation and Mr Cameron said the probe "must get to the bottom" of what had happened.

"This review will look at exactly who is responsible and they must be held accountable."

Pressed on whether the review would examine what ministers, including former Transport Secretary Justine Greening, knew and what input they had, Mr Cameron replied: "Of course it has to include everything, but from all I have seen so far it seems as if there were some technical errors made within the department about how the figures were compiled."

The Department for Transport has insisted Ms Greening, who is now international development secretary, did not know about the specific problem which led to the contract being invalidated before she left the job last month.

Sources close to Ms Greening said the permanent secretary at the Department for Transport, its top civil servant, had apologised in person to her for the errors in the process at a meeting with her and her successor Patrick McLoughlin.

Ms Greening, the source added, had had continuing and comprehensive reassurances that the process was fair when she was transport secretary.

As Conservative activists prepare to gather for the party's autumn conference in Birmingham, the prime minister also issued an upbeat message about the economy - which has been in recession since the start of the year - and the coalition's growth initiatives.

"Across the country, we have created a million net new jobs in the private sector over the last two years," he said.

"That is why unemployment has been falling even though, inevitably, there have been some cuts in the public sector."

And he suggested "radical changes" being made made to the housing sector would begin to address some of the bottlenecks in the system.

"The problem in Britain at the moment is not that we are not building enough affordable homes. The problem is we are not building enough homes, period.

"What this government has done is make it easier now for builders to build. We have changed the planning system, we are cutting out on the bureaucracy."

The prime minister also vowed to campaign "with everything I've got" to keep the UK intact and indicated a deal was "close" with the Scottish government over a single question referendum that would be put to the Scottish people in 2014.