Taxpayer 'Risk' From £10.5bn New Train Deal

A report by MPs has accused the Department for Transport (DfT) of leaving taxpayers with all the risk from two contracts for new trains worth a combined £10.5bn.

The Public Accounts Committee said that by buying the new trains for the Intercity Express Programme and for the Thameslink project directly, taxpayers "would have to cover the costs of any financial shortfall" should passenger demand fall short of expectations.

Its report said: "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."

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 DfT said in its defence that the trains would bring "enormous benefits" to commuters.

A Hitachi (Other OTC: HTHIF - news) -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 committee's chairman, Margaret Hodge, said: "The department has no previous experience of running a procurement of this kind, let alone two with a combined value of £10.5bn.

"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, described the programme as an "absolute disgrace".

He said: "The companies using these trains get to privatise the profits while the public get to shoulder over £10bn of risks."

A DfT spokesman reponded: "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."