MPs warn over new train contracts
Taxpayers have been left with all the risk over two multibillion-pound contracts for new trains, a report by MPs has said.
The Department for Transport (DfT) decided to lead on procurements of new trains for the Intercity Express programme and for the Thameslink project "despite having no previous experience of doing so", the House of Commons Public Accounts Committee said.
Its report went on: "By buying the trains directly, the department has taken on the risk of passenger demand forecasts being wrong.
"If demand proves to be lower than forecast, taxpayers would have to cover the costs of any financial shortfall."
The report continued: "These two major projects also demonstrate yet again that the department has limited capacity and capability to manage large-scale procurements, and that it remains overly reliant on consultants."
A Hitachi-led consortium is supplying 866 new carriages for the Intercity Express programme, which will replace old trains on the Great Western and East Coast lines.
German company Siemens is supplying 1,140 new Thameslink coaches to provide improved capacity on cross-London rail routes. The combined cost of the two contracts is around £10.5 billion.
The report also said that the DfT began the procurement of the Intercity Express trains "without a clear idea of how many trains would be needed, which routes they would run on and what form of power would be required".
The committee added that it was disappointed that Siemens would not be manufacturing the Thameslink carriages in the UK.
The committee's chairman, Margaret Hodge (Lab: Barking), said: "The department decision to buy the new trains itself has left the taxpayer bearing all the risk.
"The department has no previous experience of running a procurement of this kind, let alone two with a combined value of £10.5 billion. Yet it has chosen to break with its previous approach of leaving it to rolling stock companies and train operators to buy trains, transferring risk away from the rail industry back to government."
She went on: "The only way the department can limit this risk is by requiring train operating companies to use these new trains to run their services regardless of whether they best fit the services they would like to offer."
Mick Cash, general secretary of the RMT transport union, said: "Train procurement in Britain is an expensive shambles locked into the fragmentation and profiteering that has been lumped on to the taxpayer through two decades of privatisation.
"The companies using these trains get to privatise the profits while the public get to shoulder over £10 billion of risks. It is an absolute disgrace."
A DfT spokesman said: "The Intercity Express Programme (IEP) and Thameslink are huge projects that will bring enormous benefits to passengers.
"Successive Governments have considered how best to deliver these orders and have come to the same conclusion, that Government should lead with expert support and advice from the train operating companies.
"IEP and Thameslink are making excellent progress and are on track to deliver very good value for taxpayers and improved services for passengers. They are also creating thousands of new jobs across the UK rail industry."