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December 17, 2014

UK’s PAC reports DfT’s new train contracts left ‘taxpayers bearing all the risk’

The UK Department for Transport's (DfT) decision to purchase two fleets of trains worth £10.5bn has left 'taxpayers bearing all the risk', according to a report by the Public Accounts Committee.

By Samseer M

DfT

The UK Department for Transport’s (DfT) decision to purchase two fleets of trains worth £10.5bn has left ‘taxpayers bearing all the risk’, according to a report by the Public Accounts Committee.

The DfT awarded a £7.7bn contract to Hitachi-led consortium and £2.8bn to Siemens to deliver trains for the East Coast and Great Western lines, and Thameslink network respectively.

Headed by parliament member Margaret Hodge, the committee said this improper decision was a significant break from its previous approach of leaving it to the rolling stock companies and train operators to buy trains.

"We are concerned that the department did not appear to have looked at whether there were better ways of achieving its objectives."

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.

"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."

The report also said that the Intercity Express Programme was poorly managed and it is the review in 2010 that helped taxpayers not to be ‘badly ripped off.’

After that review by Sir Andrew Foster, the original successful bidder, Agility Trains, came back with a revised bid that was 38% cheaper than its original one.

"We are concerned that the department did not appear to have looked at whether there were better ways of achieving its objectives," Hodge added.

In addition, the report stated that the department needs to work with the industry through the Rail Delivery Group to clarify the respective roles and responsibilities of government and industry.


Image: Margaret Hodge MP said that the DfT’s decision to purchase the new trains for Intercity Express and Thameslink itself has left the taxpayer bearing all the risk. Photo: courtesy of the UK Parliament.

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