Refurbishing Trains: Contracts

Tuesday 12th December 2023 Lords Chamber

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Thursday 7 December.

“I thank the honourable Member for his Question, which I will answer on behalf of the Secretary of State. The department works closely with rolling stock owners and train operators to understand when new and refurbished trains are likely to be required, and to ensure a regular flow of work for train manufacturing companies. Trains are major assets, with a lifetime of 35 to 40 years, so there will naturally be peaks and troughs in procurement cycles. The average age of the current fleet is 17 years.

The department has overseen the procurement of more than 8,000 new vehicles for the Great British mainline railway since 2012. Some of those are still being produced, including Alstom trains for South Western and West Midlands trains. Passenger travel habits have changed over the past three years, and while numbers are showing signs of improvement, we are still seeing reduced passenger revenue on the railways. We are aware that Alstom is facing difficult trading conditions. It is consulting its unions and employees on possible job losses. While it must be a commercial decision for Alstom, the Government have been working with the company to explore options to enable it to continue manufacturing at its Derby site. Officials from my department and my right honourable friend the Secretary of State for Transport have held regular meetings with senior management at Alstom. We have also convened a cross-Whitehall group to advise on ways to support continued production at Derby and how best to support those workers who could lose their jobs.

The fact remains that the market for passenger trains is competitive. The department cannot guarantee orders for individual manufacturers. None the less, we expect substantial continued demand for new trains. Last month, LNER confirmed an order of 10 new tri-mode trains for the east coast main line, and on Monday, a tender for new trains for the TransPennine Express route was launched. Contract awards are also expected between late 2024 and early 2025 for major orders for Southeastern, Northern and Chiltern. In the meantime, the Government will continue to work with Alstom and other UK manufacturers to ensure a strong and sustainable future for the rail industry”.

15:35

[Lord Tunnicliffe (Lab)]

Alstom’s Litchurch Lane factory in Derby has provided high-skilled jobs for generations, but uncertainty over the UK rail industry and the lack of long-term strategy means that those workers are now in jeopardy. The workers are a national asset. People are one of the scarcest assets in this country; an asset that must be looked after to preserve the capability to lead to long-term growth.

Last Thursday, the Rail Minister in the other place, Huw Merriman, said:

“We will be doing everything we can to assist Alstom in keeping that plant open”.—[Official Report, Commons, 7/12/23; col. 486.]


That is a very hard, precise commitment. Can the Minister tell us what action the Government have taken in the light of that promise?

[The Parliamentary Under-Secretary of State, Department for Transport (Lord Davies of Gower) (Con)]

My Lords, we have been actively involved in discussions with Alstom for several weeks on this matter and have held frequent meetings with the company to look at options around its production gap. We will continue to work with Alstom. A cross-departmental task force has been established and officials are meeting Alstom regularly to discuss how best to support employees at risk of redundancy.

[Baroness Randerson (LD)]

My Lords, in the past, when a major long-standing employer such as Alstom hit a crisis, the Government used to blame the shackles of EU competition law. Well, we are not bound by that any more, so who will the Government blame now? The truth of the matter surely is that the Government need to provide certainty on the new orders required.

The managing director of Alstom, in evidence to the Transport Committee in the other place, made it clear that one of its immediate problems is uncertainty over whether the Government will pursue the £2 billion contract for all the 54 HS2 trains they have ordered. Can the Minister tell us, here and now, whether that is the case? Will the full order still be required?

[Lord Davies of Gower (Con)]

I thank the noble Baroness for that question. What I can say to noble Lords that manufacturers are ultimately responsible for sourcing work for their assembly plants. There are upcoming procurements in the market being run by Northern, Southeastern, TransPennine and Chiltern. It is a competition process that is open to all manufacturers to bid, including Alstom in Derby. The department is also working with the Treasury to set out a pipeline for expected rolling stock orders, to provide the sector with further clarity over the near term.

Regarding HS2, Alstom are part of a contract with Hitachi to design, build and maintain HS2 trains for phase 1 only.

[Baroness McIntosh of Pickering (Con)]

My Lords, may I wish the Government all the best in ensuring a future for Alstom? Who is responsible for ensuring that the overhead electricity wires are fit for purpose? We have seen three outages in two different parts of the country, one of which lasted three days and caused absolute havoc on the east coast main line. This cannot be sustainable. Will the Minister assure us that there is a rolling programme of improvements and refurbishment of the overhead lines, particularly on the east coast main line?

[Lord Davies of Gower (Con)]

Well, we have been subject to adverse weather, of course. I can, however, assure my noble friend that Network Rail is responsible for overhead lines. I will take her comments back to the department.

[Lord Grocott (Lab)]

My Lords, I do not think the Minister answered properly the question about HS2. It was, in my view, a disastrous decision made by the Government to cancel the Derby and Manchester links, so can he tell us how many trains were required, had those links still been about to be built, and how many trains are now required, so we can work out the deficit for ourselves? While he is about it, will he please answer a question which his department has repeatedly been unable to answer for me as a Written Question: precisely how much money has been lost—wasted—as a result of the cancellations to which I have referred?

[Lord Davies of Gower (Con)]

The noble Lord asks two very fair questions. I do not have those details to hand, but I will ensure that he gets them in written form.

[The Lord Bishop of St Albans]

My Lords, last week in the other place the Department for Transport said that the contract tenders for refurbishing existing trains would be brought forward very soon. Time is short for Alstom, the only end-to-end manufacturing facility in the UK. Can the Minister give any assurances about how soon these contracts will be brought forward, because the days are now being counted down?

[Lord Davies of Gower (Con)]

I cannot give any specifics in terms of days, but the department is certainly aware of this and will bring it on as soon as possible. I assure the right reverend Prelate that, if I can ascertain exactly how many days, I will write to him with the information.

[Baroness Butler-Sloss (CB)]

My Lords, it may be my fault, but I have not actually understood whether the current HS2 contract with the company is or is not going to go forward.

[Lord Davies of Gower (Con)]

The contract with HS2 and Alstom will go forward in terms of phase 1.

[Lord Watts (Lab)]

My Lords, the Minister says that there will be investment in the railways. We know that there is money being kept safe from the cancellation of High Speed 2; how much of that is going to be transferred to northern schemes, because it looks quite clear that the Government are transferring money intended for the north down to the south?

[Lord Davies of Gower (Con)]

If I am correct, I believe it was somewhere in the region of £30 billion to £34 billion.

[Lord Ranger of Northwood (Con)]

My Lords, having had a small passion around railways and networks—in fact, the last time we ordered some new rolling stock for London, I was with the then mayor as we brought the S stock trains into London—I have looked at the timelines and supply chains, especially with manufacturers in and across the UK. Does the Department for Transport have a view on what rolling stock may be part of the ordering book when we look at network north plans, and also for plans for the London Underground, which seem to be going a bit slower than they should be?

[Lord Davies of Gower (Con)]

Well, the department is always talking with rail operators and manufacturers. Of course, rail manufacturers play an important role in growing the UK economy, and there is a strong pipeline for future orders for UK rail manufacturers. As I perhaps alluded to earlier, there are upcoming procurements in the market being run by Northern, Chiltern, TransPennine and Southeastern; this competition process is open to all manufacturers to bid, including Alstom. As I said earlier, the department is also working with HM Treasury to set out a pipeline for expected rolling stock orders, to provide the sector with further clarity over the near term.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, it is a pity that the noble Lord, Lord Young of Cookham, is not here for this, because he is the guilty man, as he was the Minister who privatised the railways in such a chaotic way. As well as the overhead lines and the rails being run by one company, and the actual services by other companies, the LNER reminded me recently that it does not actually own its trains—it only rents them. It is total chaos. I seem to remember that this Government—on their last legs now, but nevertheless—suggested some kind of “Great British Rail” set-up, to try to improve the position. What has happened to that?

[Lord Davies of Gower (Con)]

It has been the case for many years that train companies lease their rolling stock, and that still is the case.

[Baroness Kramer (LD)]

My Lords, could the Minister unpack the statement he has made, which sounds so very reassuring, that the Government will abide by the contract for the purchase of trains for phase 1 of HS2? Surely, the train manufacturer invested and provided facilities for the HS2 project overall. The same trains of course would run beyond Manchester when the line was extended and, therefore, you cannot mix and match two different sets of trains. Has he looked at the economics of the decision that has been made and understood what the consequences are for the manufacturer with which he is contracted?

[Lord Davies of Gower (Con)]

I say, in answer to the noble Baroness’s question, that Alstom is part of a contract with Hitachi to design, build and maintain HS2 trains for phase 1 only. Phase 1 of HS2 between Birmingham and London will continue, with a rescoped Euston station. We expect Alstom’s contractual obligations to be honoured with HS2 Ltd.