East Midlands, South Eastern & West Coast Franchise Updates April 2019

[whole diary]

[Electric train]

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^▸ (British Rail(ways)) employees which is tranferable between "railway employers"
  Railway Pension Scheme, "the indefencible right" for people who have been TUPE^▸ (The Transfer of Undertakings (Protection of Employment) Regulations 2006.) '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
 

[Timmer]

Serious questions have to be asked when two companies Stagecoach and Virgin have acted in the way that they have of the seriousness of the money needed to fund railway pensions. Could we see the same from Firstgroup when it finally comes to bids being invited for the GW^▸ (Great Western) franchise?

If I was to bet who’s got it right and who has got it wrong I’m going to have to go with the private companies here. I think the government are being unrealistic to expect them to shoulder the funding of the railway pensions in return for a franchise. Gosh, Dft are struggling to get companies to bid as it is.

[martyjon]

Someone from Stagecoach was on BBC^» (British Broadcasting Corporation - home page) Radio 4 Today programme earlier this morning, didn't catch his name as was in shower at time.

Question of pensions was inevitably addressed and spokesperson said that the requirement to make a contribution to railway pension fund was only added by the DfT^» (Department for Transport - about) AFTER the announcement of the shortlisting of the pre-qualifiers. He also sort of stated that in the Railways Privatisation (under the Tories) the railway pension scheme liquidity was guaranteed by HM Treasury but now the government want to transfer that liability onto the rail operators collectively expecting them to pay the continuing pensions of those pensioners who were pensioned off BEFORE privatisation but without the previous owners of the nationalised railways (HMG) making any contribution at all.

I expect 'fireworks' to come, this isn't going to go somwhere and lie down IMHO^▸ (in my humble opinion).

[Timmer]

It's not just Stagecoach and Virgin.

Tweet from Roger Ford Modern Railways

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.

One can only assume that the Dutch government is happy to fund UK^▸ (United Kingdom) rail workers pensions.

[Lee]

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

[JayMac]

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

Only insomuch as Failing of the DfT^» (Department for Transport - about) has said he'll be awarding the WCP franchise in June.

If there were no compliant bids still in the mix then I would have expected him to have said so. But then we're talking about rail franchising and the worst SoS ever to walk through the DfT's door on Marsham St, so any outcome is possible.

[grahame]

... SoS ever to walk through the DfT^» (Department for Transport - about)'s door on Marsham St, so any outcome is possible. ...

<pedantmode>Horseferry Road?</pedantmode>. I will admit to going to Marsham St by mistake the very first time I visited the DfT ... and that was well before Mr Grayling got the Secretary of State role.

It has struck me as faintly amusing that our Department for Transport is now situated on a road name after an archaic form of transport - the horse ferry!

[JayMac]

Yes, grahame. Same building. The entrance moved some years ago from Marsham St round the corner to Horseferry Rd.

[ChrisB]

No one has yet emphasied that pension liability for the year's of any franchise will extensd to years well after the end of said franchise....which explains why Stagecoach et al are saying that they can't accept the risk for something they can't control...they must surely win at court or else there won't be any future bidders & the DfT^» (Department for Transport - about)/HMG will have to fund it anyway....

[Timmer]

I have little if any confidence that HMG/Dft have learned their lesson from the last fiasco involving giving the WC^▸ (Wiltshire Council (Unitary Authority)) franchise to Firstgroup. Though a different situation, both revolve around the same thing...money and oooozzz gonna pay for it!

Another potential humiliating experience could befall them in court me thinks.

[eightonedee]

One can only assume that the Dutch government is happy to fund UK^▸ (United Kingdom) rail workers pensions.

...or have not been thorough enough in doing their due diligence or reading the small print?

[Electric train]

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^▸ (British Rail(ways)) employees which is tranferable between "railway employers"
  Railway Pension Scheme, "the indefencible right" for people who have been TUPE^▸ (The Transfer of Undertakings (Protection of Employment) Regulations 2006.) '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
 

I kinder guessed the Trade Unions have reacted in a quite forthright manor to what the DfT^» (Department for Transport - about) are doing, quite rightly too

[LiskeardRich]

Being the ever sceptical, have the DfT^» (Department for Transport - about) looked with a fine tooth comb for a non compliance as an excuse to boot Stagecoach following the East Coast Fiasco?

[Celestial]

Being the ever sceptical, have the DfT^» (Department for Transport - about) looked with a fine tooth comb for a non compliance as an excuse to boot Stagecoach following the East Coast Fiasco?

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.   

[mjones]

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.

One of the biggest failings of privatisation in general has been the delusion that transfering risk to the private sector will save money in the long term.