Great Western Coffee Shop

I have some sympathy for Stagecoach - but it seems that they've only been banned from these franchises, according to the write-ups?

https://www.gov.uk/government/speeches/east-midlands-south-eastern-and-west-coast-partnership-franchise-updates

The franchise is due to start on 18 August 2019 and will run for 8 years, until 21 August 2027, with an extension of 2 years callable at my discretion.

RMT ON NEWS STAGECOACH IS BANNED FROM BIDDING FOR FRANCHISES

RMT demands that Stagecoach contracts be taken into public ownership‎ as company is banned from bidding for rail franchises.

RAIL UNION RMT has demanded that immediate steps be taken to bring franchises involving Stagecoach into public ownership as it emerged that the company have been barred from bidding in the current round of franchise awards.

RMT has warned that services, and the jobs of thousands of rail workers, are now left hanging by a thread as the chaotic mis-management of Britain’s railways takes another turn for the worst. With 70% of the British public supporting public ownership RMT is stepping up campaigning in light of the latest news.

continues

10 April 2019

Department for Transport rail franchising programme

Stagecoach Group plc ("Stagecoach") has been informed by the Department for Transport ("DfT") that it has been disqualified from the current three UK rail franchise competitions.

Stagecoach was shortlisted in the following franchise competitions:

• East Midlands where it was bidding independently

• South Eastern where it was bidding with support from its intended partner Alstom

• West Coast Partnership where it was part of a joint bid with Virgin Group and SNCF

A senior DfT official has verbally informed Stagecoach that it has been excluded from all three competitions for submitting non-compliant bids principally in respect of pensions risk.

Bidders for these franchises were asked to bear full long-term funding risk on relevant sections of the Railways Pension Scheme. This is at a time when The Pensions Regulator is seeking additional funding because of serious doubts over the Government's ongoing support for the industry-wide scheme.

Stagecoach Group Chief Executive Martin Griffiths said: "We are extremely concerned at both the DfT's decision and its timing. The Department has had full knowledge of these bids for a lengthy period and we are seeking an urgent meeting to discuss our significant concerns.

"We have drawn on more than two decades of rail experience and worked in partnership with local stakeholders to develop high quality proposals to improve each of these rail networks.

"We bid consistent with industry guidance issued by the Rail Delivery Group and shared with the DfT. Without ongoing Government support for the long-term funding of railway pensions, The Pensions Regulator has indicated that an additional £5billion to £6billion would be needed to plug the gap in train company pensions.

"In contrast, the rail industry proposed solution would have delivered an additional £500million to £600million into the scheme. This would have provided better stability and security for members and much better value for taxpayers.  We are shocked that the Government has rejected this for a higher risk approach. We would urge that a full independent value for money review is undertaken into this issue without delay.

"Along with many other train companies, we believe strongly that the private sector should not be expected to accept material risks it cannot control and manage. In fact, this was a key finding of the Brown review into rail franchising more than six years ago. We are therefore extremely surprised that the Government still expects private operators to take risks they are not best placed to manage, despite the recent difficulties experienced by a number of operators of outsourced public sector contracts.

"Forcing rail companies to take these risks could lead to the failure of more rail franchises and cannot be in the best long-term interests of either customers, employees, taxpayers or the investors the railway needs for it to prosper.

"This is more evidence that the current franchising model is not fit for purpose, a view which has already been expressed by Keith Williams, who is leading the independent review of the rail system.

"It also further damages the already fragile investor confidence in the UK rail market and it undermines the involvement of two of the last British transport groups who are part of running Britain's railway.

"Over more than 20 years, we have delivered industry-leading performance, record passenger growth, excellent industrial relations, and the highest levels of customer satisfaction in the sector. We will continue to focus on delivering high quality services for our customers at our existing rail businesses."

ENDS

Stagecoach says it is "extremely concerned" after the Department for Transport (DfT) barred it from three UK rail franchise bids.

The DfT says the bids for the East Midlands, South Eastern and West Coast franchises were "non-compliant" because they did not meet pensions rules.

Martin Griffiths, chief executive of Stagecoach, has called for an "urgent meeting" with the DfT.

Stagecoach had "repeatedly ignored established rules", the DfT said.

Mr Griffiths said in a statement: "We are extremely concerned at both the DfT's decision and its timing. The department has had full knowledge of these bids for a lengthy period and we are seeking an urgent meeting to discuss our significant concerns."

Bidders for the franchises have been asked to bear full long-term funding risk on relevant sections of the Railways Pension Scheme, Stagecoach said. The Pensions Regulator has estimated the UK rail industry needs an additional £5-6bn to plug the pensions shortfall, and the company said it was being asked to take on risks it "cannot control and manage".

Mr Griffiths said: "Forcing rail companies to take these risks could lead to the failure of more rail franchises and cannot be in the best long-term interests of either customers, employees, taxpayers or the investors the railway needs for it to prosper."

It was, he said, "more evidence that the current franchising model is not fit for purpose" and "further damages the already fragile investor confidence in the UK rail market".

Stagecoach had bid independently for the East Midlands franchise, had intended to partner with Alstom for the South Eastern operations, and was jointly bidding for the West Coast Partnership with Virgin and SNCF.

Stagecoach shares fell almost 10% in early trading.

'Ignored rules'

A DfT spokesman said that other bidders had met its requirements, and also announced that the East Midlands franchise had now been awarded to Abellio "after they presented a strong, compliant bid".

He said: "Stagecoach is an experienced bidder and fully aware of the rules of franchise competitions. It is regrettable that they submitted non-compliant bids for all current competitions which breached established rules and, in doing so, they are responsible for their own disqualification.

"Stagecoach chose to propose significant changes to the commercial terms for the East Midlands, West Coast Partnership and South Eastern contracts, leading to bids which proposed a significantly different deal to the ones on offer.

While Stagecoach has played an important role in the UK railways industry, "it is entirely for Stagecoach and their bidding partners to explain why they decided to repeatedly ignore established rules by rejecting the commercial terms on offer".

Stagecoach, which also has a huge bus division, currently operates the East Midlands rail franchise between London St Pancras International and destinations including Leicester, Derby, Sheffield, Nottingham, Manchester and Liverpool.

The company has a 49% share in Virgin Rail and also runs the Sheffield Supertram.

Stagecoach's East Coast franchise was renationalised last year following poor performance and mounting losses.

Stagecoach Chief Executive Martin Griffiths said 'Along with many other train companies, we believe strongly that the private sector should not be expected to accept material risks it cannot control and manage’,

We’re baffled why the DfT did not tell us that we would be disqualified or even discuss the issue – they have known about this qualification in our bid on pensions for months.

Our first priority is always to look after our teams. The pensions regulator has warned that more cash will be needed in the future, but no one knows how big that bill might eventually be and no responsible company could take that risk with pensions. We can’t accept a risk we can’t manage - this would have been reckless. This is an industry-wide issue and forcing rail companies to take these risks could lead to the failure of more rail franchises.
We have significant concerns over the latest developments and their implications for the future of the UK rail market. We are still looking closely at the decision and we are now considering our options.

In contrast the Stagecoach story is the lead item in the Daily Telegraph city page, which reports that Arriva's East Mids bid was also non compliant and excluded. So with all bids for South Eastern non compliant and two out for East Mids everyone was out out of step but Abellio.

Do we know whether the First/Trenitalia and MTR/Guangshen/Renfe bids for the West Coast Partnership are compliant?

... SoS ever to walk through the DfT's door on Marsham St, so any outcome is possible. ...

One can only assume that the Dutch government is happy to fund UK rail workers pensions.

I can understand why the Government want to have the Railway pensions as part of the bit; when the railways were privatised there were 2 things the Unions gained in the Act -

• Staff travel to be safeguarded for BR employees which is tranferable between "railway employers"
  Railway Pension Scheme, "the indefencible right" for people who have been TUPE 'd they basically have the same pension rights as they had in BR, for those us who have moved employers we still have a number of protections eg if i move employer they have to offer me membership of their RPS
  

As the Railway Pension Scheme is part of the Act that privatised the Railway this mean HMG has potentially the lieablity, also they are very mindful of the recent business that crashed BHS, Carillion all of which has had high media interest HMG just would not want the poo that would come their direction if a contract they have awarded to a company that subsiquently went bust meant HMG were implimented in pensions fund collapse.

The RPS also has another acute issue, Railway people tend to be long serving, with privatision now 25 years ago and the RPS scheme is 40 years and many of the railway companies ceased offering the full RPS years ago it dont take much working out to see there is a very large draw on the railway pension fund ................ which is started to happen
 

Being the ever sceptical, have the DfT looked with a fine tooth comb for a non compliance as an excuse to boot Stagecoach following the East Coast Fiasco?

I've seen comment that the risks and costs involved could dwarf the expected profits bidders would hope to make. Also, that if the government succeeds in transferring the pension costs, that will itself cause the costs to rise as the train operators are considered by the pensions regulator less secure than the government, so it will demand more money be put into the funds. Just what the bidders are worried about.

I'm not sure that's the case. It sounds as though bidders have (with the exception of Abellio) walked away from the government who changed the goalposts and asked them to take on future increases in pension costs. So, South Eastern has had no "complaint bids" and remains unlet, but the government got luck with East Midlands and Abellio.

I've seen comment that the risks and costs involved could dwarf the expected profits bidders would hope to make. Also, that if the government succeeds in transferring the pension costs, that will itself cause the costs to rise as the train operators are considered by the pensions regulator less secure than the government, so it will demand more money be put into the funds. Just what the bidders are worried about.

So, all rather complicated, but I can see why most bidders seem to have run a mile. I wonder whether Abellio still thinks it has done the right thing, and if the Dutch government thinks so too.   

175 years of experience has embedded in Abellio a social duty to passengers which extends beyond the journey on one of our trains, trams or buses. The passenger is at the heart of everything we do. The delivery of safe, reliable and comfortable services is the starting point for every transport provider, but that is not enough for Abellio. Our services must play an integrated role in the socio-economic development of the societies we serve. 

We are more likely to see the likes of SNCF and DB buying into UK railway

DfT deadline for pensions explanation is just hours away, with MPs Committee for Work and Pensions also now involved - http://railnews.mobi/news/2019/04/16-dft-deadline-for-pensions-explanation.html

THE Department for Transport has responded to the demand from Stagecoach Group for a ‘prompt, full and transparent response to help restore public confidence’ after three franchise bids from the Group were rejected on the grounds that they attempted to reduce pensions risk.

It had been reported that the deadline was 16.00 on 16 April, but Stagecoach has now clarified that the deadline was actually 24 hours earlier, and that a response has been received.

However, the matter appears to be far from settled.

A spokesman for Stagecoach said: ‘We can confirm we have received a letter from the DfT, which we are reviewing in detail. However, we consider the response to our questions to be both vague and incomplete, leaving many of the fundamental issues and concerns raised by ourselves and other parties unaddressed.’

Stagecoach has been told that its bids for East Midlands, South Eastern and West Coast Partnership have all been rejected, because its alternative proposals for pensions were not acceptable to the government.

The full text of the DfT response to Stagecoach has not been published.

It has also been confirmed that Arriva was also barred from bidding for East Midlands, again because it had attempted to reduce the pensions risk, leaving Abellio as the only contender.

Stagecoach has asked that the confirmation of the Abellio award, which would normally follow after a ten-day standstill period, be delayed by a further fourteen days. Again, it is not yet known whether the DfT has agreed to this.

So Stagecoach didn’t comply with the ITT. Doesn’t like it when the DfT called their bluff. Sound like bad losers?

Neither side comes out smelling of roses ... it also strikes me as pretty poor practise to put out an ITT which so many bidders don't copy with that it reduces the bidder pool to an impractically small group (or singleton).  Unless, of course, that decision to write the ITT in that way was or is part of a bigger plan.

So Stagecoach didn’t comply with the ITT. Doesn’t like it when the DfT called their bluff. Sound like bad losers?

Legal action launched against @transportgovuk by @stagecoachgroup over “opaque decision making” following exclusion from three franchise bids.

Stagecoach Group commenced legal action against the Department for Transport on May 8, preventing the award of the next East Midlands franchise to NS subsidiary Abellio which had been named the preferred bidder on April 10. The initial 10-day standstill period had already been extended, and was due to expire at midnight on May 8.

Stagecoach has issued its claim at the High Court in London under Part 7 of the Civil Procedure Rules, alleging that DfT breached its statutory duties under Regulation 1370/2007, which requires the government to adopt a competitive tendering process which is open to all operators, fair, transparent and non-discriminatory.

Incumbent Stagecoach was disqualified from the East Midlands bidding process after its bid was deemed non-compliant. The issue centres on the way the next franchise would change the allocation of financial risk associated with the industry-wide Railways Pension Scheme.

Background

Further to the announcement that the East Midlands franchise had been awarded to Abellio on 10 April, the Transport Committee and Work and Pensions Committee united to write to the Secretary of State for Transport, Chris Grayling MP with eight questions.

Chair of the Transport Committee, Lilian Greenwood MP:

“These issues raise serious questions for the future of the franchising system. We’ll be putting these questions to the rail minister, Andrew Jones MP, in our evidence session this morning.”

Chair of the Work and Pensions Committee, Frank Field MP:

“What a wretched mess, for pension scheme members and commuters alike – no clear plan for fixing it and a multi-billion pound obstacle on the track. Let’s hope the Rail Minister has some answers this morning.”

A Department for Transport spokeswoman added: "We have now signed the contract confirming Abellio as the new operator of East Midlands Railway from August 2019.

Site contains correspondence ...

Chris Grayling’s embattled transport ministry faces a second legal challenge over the way the East Midlands rail franchise was awarded, from Arriva Rail, owned by Germany’s state-backed Deutsche Bahn.

Who pays for these legal challenges?

33 trains replacing over 50? Some of which are 8 cars in length?

Have I read something wrong??

Replacement of the entire train fleet with more than 340 carriages. This includes 165 brand new bi-mode intercity carriages (33 trains) linking cities in the North and East Midlands to London St Pancras, and modern diesel trains improving East-West journeys

Four engines instead of three on them I believe?  Presumably due to more high speed running under diesel power than on the GWR fleet.  Shorter length vehicles as well.