Railways: Thameslink Rolling Stock Contract

Thursday 14th July 2011 Lords Chamber

Question

11:29

Asked By

[Lord Kennedy of Southwark]

To ask Her Majesty’s Government whether they will review their decision to award the Thameslink rolling stock contract to Siemens.

[Earl Attlee]

My Lords, the competition for the Thameslink trains was designed and launched in 2008 in accordance with EU treaty obligations and UK public procurement regulations. I am satisfied that the proper process as originally advised to the bidders has been complied with. Both bids have been treated equitably and fairly in the process. The Siemens bid demonstrated that it offered better value for money against the published criteria and consequently the Government will not be reviewing the decision.

[Lord Kennedy of Southwark]

I thank the noble Earl for his response. When the Prime Minister and his colleagues came to Derby recently we heard lots about supporting engineering and manufacturing and creating jobs, but there is a wide gap between the words and the deeds. Why were the credit ratings of the two companies such a determining factor? This decision means that the last train maker in the UK—a maker of quality products and inward investor to this country—and the 1,500 people who will lose their jobs, whose families live in and around Derby, never stood a chance. That is a disgrace.

[Earl Attlee]

My Lords, it is not for me to comment on the ability of bidders to raise the finance. However, the model selected by the previous Administration is a good one and we support it. It is important to remember that the Siemens bid will also create employment in the UK, although I have to accept that it will not be as much.

[Lord Rosser]

My Lords, on Tuesday, the Conservative MP for Mid Derbyshire said:

“Over the months … we have been waiting for the decision, I personally lobbied the Secretary of State for Transport … Unfortunately, he told me every … time that I was not to worry because Bombardier was fine … as the company had lots of orders and would have no problem going forward. That is clearly not the case, so he misread the situation. I hope that he feels somewhat apologetic about the decision”.—[Official Report, Commons, 12/7/11; col. 10WH.]

That statement by the Conservative MP gives the game away. If the Secretary of State will not review the decision, what will he now do in negotiations with Siemens as the preferred bidder to maximise the number of additional jobs that it creates in this country to compensate for the thousands of jobs that will be lost in Derby and elsewhere in the rail supply chain as a result of the complacency and misjudgment which have now been revealed by one of his own MPs to have been behind the Secretary of State’s decision?

[Earl Attlee]

My Lords, any job losses are highly regrettable. However, Bombardier has previously advised the department that it expected to make redundancies at this time regardless of the outcome of the Thameslink procurement order as Bombardier’s Derby factory is currently operating at peak capacity and several of these orders come to an end later this year. Noble Lords will know that there are several other rolling stock procurement contracts in the offing.

[Baroness Kramer]

My Lords, as I am sure the Minister will agree, it is crucial that we keep in this country the engineering skills to design and build trains. Are there any planned negotiations with Siemens and Hitachi to bring those kinds of jobs to the UK? In the case of Bombardier, has he considered extending some of its existing contracts, for example to provide electrical units to the train sets it has already built, and that are much needed on the Great Western, Northern and Southern lines and would help preserve that skill base in this country?

[Earl Attlee]

My Lords, on the last point, I am not sighted on that, but I will write to the noble Baroness if I have anything to add. There is an issue about the capacity for Bombardier to design rolling stock in the UK, but it is a matter for that company whether or not it maintains a capacity.

[Lord Pearson of Rannoch]

My Lords, are the Government aware that under the EU treaties there is no enforceable sanction against a country that refuses to pay a Brussels fine? So, why do we not behave like the French and award the Thameslink contract to Bombardier? Do the Government further agree that there would not even be the slightest risk, alas, that we would be ejected from the EU if we failed to pay any eventual fine? So, why do we not just go ahead and do it?

[Earl Attlee]

My Lords, the United Kingdom has never been fined in respect of an EU infraction and Her Majesty’s Government have no intention of allowing that to happen. I hope that the noble Lord fully accepts the benefits of competition. It would be most peculiar to keep accepting bids that were not competitive.

[Lord Broers]

Does the Minister agree with me that this is just a symptom of a long-term problem whereby we have failed to co-ordinate our R&D expenditures, our government procurement and our encouragement of industry to put itself in a competitive position? We really must co-ordinate these things across the board so that our bid is clearly the strongest. I declare my interest as chairman of the Transport Knowledge Transfer Network of the Technology Strategy Board, which is trying to do these things but with precious little resource.

[Earl Attlee]

My Lords, the noble Lord makes an extremely good point. Another point concerns the need to schedule work such as rolling stock and other projects in order to avoid a situation of feast and famine. The McNulty report addresses that issue.