There have been a couple of developments recently in this long, on-going saga. I apologise in advance for the length of this post but the topic is important as it affects everybody - whether taxpayers or travellers.
On 9 July 2014 the National Audit Office published its report on the
DfT» 's handling of the
IEP▸ and Thameslink procurements. I think it is fair to say the NAO was not impressed, although dressed up in mandarin-speak, as it states on its website:
Today^s report also highlights that the Department was departing from its stated policy of leaving train procurements to the industry, particularly following its decision in July 2013 to exercise an option in the original contract with Agility Trains to add 270 carriages to its Intercity Express order at a cost of ^1.4 billion. This has created confusion in parts of the industry about the Department^s role.
The Department estimates that future payments will be around ^7.65 billion for InterCity Express over 27.5 years and ^2.8 billion for Thameslink over 20 years. Contracts include the cost of the trains themselves as well as the cost of maintenance and of depots. The Department also has the opportunity to gain from future reductions in the cost of financing both procurements.
Today^s report points out that both procurements achieved levels of competition equivalent to or better than other rolling stock procurements since 2000. However, in the case of Intercity Express, the Department decided to proceed with a revised bid without rerunning the competition. The Department view is that no other manufacturer could offer better value for money but this remains untested.
Just two years after the Intercity Express procurement began, the Department decided to electrify the Great Western Mainline which meant that diesel trains were no longer needed. While the programme was designed to be flexible enough to accommodate this change of direction, the NAO recommends that the Department in future major procurements produce a detailed, integrated plan to bring together infrastructure, rolling stock and franchising strategy.
The Department awarded both contracts more than two and a half years later than intended, largely because of pauses to the procurements and the challenge of securing finance for these projects during the financial crises.
The full report is available at
http://www.nao.org.uk/wp-content/uploads/2014/07/Procuring-new-trains.pdfThe other part of this story is that Roger Ford, of Modern Railways magazine, has for some years been trying to identify the actual costs to the
TOC▸ of these new trains - specifically the IEP. He has in the past produced figures showing what appeared to be excessive costs for the IEP compared to equivalent trains. I used these figures, an
extra cost of ^20,000 per month per vehicle making a total of some ^80 million per year for the
GW▸ , in a letter I wrote to my
MP▸ in 2011. Some time later
he my MP copied me a letter which he had received from Theresa Villiers of the MoT which took me to task for calling the Intercity Express Programme a 'PPI procurement' when actually it is a 'total train service provision' contract. My numbers were unchallenged so I can only assume they were correct.
This week, in his e-mailed preview of his Informed Sources column in Modern Railways,
he Mr. Ford uses the NAO's figures to update his estimation of the monthly cost per diagrammed coach of the Hitachi's Super Express Train.
He shows that, on average, Super Express Train operators will be paying Agility Trains ^64,000 per diagrammed vehicle per month. In 2012 the Pendolinos were costing Virgin ^32,400 per vehicle per month. This is a valid comparison as in both cases the contracts are total train service provision deals combining finance, maintenance and cleaning.
I appreciate that the
HSTs▸ are nearly at the end of their life, but if
IIRC▸ the leasing costs of a Mk3 coach are something like ^8,000 to ^10,000 per coach per month. Allowing for the leasing costs of the power cars puts up the 'per coach' cost and to make the comparison more accurate the maintenance costs should be added which fGW does on its own account but which for the IEPs and Pendolinos are included in the leasing payments. Even so 'per coach' the total cost can't be much more than ^20,000 per month.
The NAO has confirmed earlier estimations that the Great Western and East Coast operators will be paying twice as much for their trains as Virgin does on the West Coast for a faster and more complex (tilting) train. And the IEP will cost around THREE times as much as the HSTs currently in use.
The unavoidable conclusion is that some combination of increased fares, reduced premiums or increased subsidy will be necessary for the operators of these trains as it beggars belief that three times the amount of work will be got out of them compared with the HSTs or IC225s.
Or, possibly, the DfT will find some cunning financial engineering way of indemnifying the TOCs for the excessive charges - which means you will pay anyway as a taxpayer.
Edited for clarity.
