Rail Manufacturing: Job Losses

Wednesday 17th April 2024 Lords Chamber

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Tuesday 16 April.

“I thank the honourable Lady for her Urgent Question. I am responding on behalf of the Secretary of State, who will shortly be meeting the Alstom group chairman and chief executive to discuss a potential way forward. The Secretary of State will come to the House and make a Statement at the appropriate time, noting the fact that they are sensitive commercial discussions.

As set out in the comprehensive open letter from the Secretary of State to the honourable Lady on 29 March, the Government are well aware that companies such as Alstom and Hitachi face short-term gaps in their order books. The letter set out clearly that these are complex problems to which there are not simple solutions, but the Government have been doing everything they can to support the workforce over many months, and continue to do so.

While Alstom is currently consulting its unions and employees on possible job losses, this 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. We have convened a cross-Whitehall group to advise on how to support continued production at Derby and how best to support those workers who are at risk of redundancy. We have held similar discussions with Hitachi, both in correspondence and face to face. We remain keen to work with Hitachi as it looks for commercial solutions to guarantee the long-term sustainable future of its Newton Aycliffe site. Hitachi is not currently consulting on any changes to its workforce.

The fact remains that the market for passenger trains is a competitive one. The department cannot guarantee orders for individual manufacturers. Trains are major assets with a lifetime of 35 to 40 years, so there will naturally be peaks and troughs in the procurement cycle. Nevertheless, we expect substantial continued demand for new trains. In recent months, London North Eastern Railway confirmed an order of 10 new tri-mode trains for the east coast main line. A tender for new trains for TransPennine Express was launched in December 2023.

In January this year, I wrote to train manufacturers to outline the pipeline of current and expected orders for new trains. That included details of current competitions for Northern, Southeastern, Chiltern and TransPennine Express, and an expected procurement by Great Western Railway. The contracts are worth an estimated £3.6 billion, with more than 2,000 vehicles to be procured over the coming years. In the meantime, we will continue to work with UK manufacturers, including Alstom and Hitachi, to ensure that there is a strong and sustainable future for the rail industry”.

15:50

[Lord Liddle (Lab)]

My Lords, I would first like to pay tribute to my noble friend Lord Rosser, who, sadly, passed away last week. In the context of this Question, he was an exemplar of the very finest in railway trade unionism.

In the other place, the much-respected rail Minister Huw Merriman said that the Government were working on a short-term solution to bring forward orders at the Alstom plant in Derby. Can the Minister confirm that, as reported in today’s Telegraph, this involves new trains for the Elizabeth line? Before Covid there was considerable investment in new rolling stock, but does he accept that, as the Treasury’s grip on railway finances has strengthened, his department has displayed, in the last couple of years, what can only be described as powerless drift and delay? This is no way to treat workers’ lives, and no way to conduct policy in a vital industrial sector. Where is the plan? Where is the promised guiding mind that will end the railways’ chaotic fragmentation?

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

My Lords, I too pay my respects and offer my condolences to Lord Rosser’s family.

Several train operators are in the market for new trains, which will provide significant commercial opportunities for UK rolling stock manufacturers. Alstom will have the opportunity to take part in competitions for future contracts. Rolling stock owners are also continuing to support the supply chain by investing heavily in their fleets. Several major upgrades are under way, including for Govia Thameslink Railway’s Porterbrook-owned Electrostar fleet, and for Avanti West Coast’s Angel Pendolino fleet refurbishment.

[Baroness Randerson (LD)]

My Lords, I would also like to pay tribute to the noble Lord, Lord Rosser, who I regarded as a friend and whose contribution to this House I greatly respected.

The Government have a feast-and-famine approach to ordering rolling stock. Between 2012 and 2019, 8,000 vehicles were ordered, but between 2019 and 2023, 100 vehicles were ordered. It also seems to take the Department for Transport an absurdly excessive time to move through the procurement process: from invitation to tender to the delivery of the first vehicle takes over six years. Are the Government, as some suspect, on a deliberate go-slow in order to reduce expenditure? In view of the news about the desperate last-minute attempts to conjure up some orders for Elizabeth line trains, does the Minister accept that, with thousands of jobs at risk in Alstom and Hitachi, this reveals a desperate gap—a black hole—at the heart of the Government’s industrial policy?

[Lord Davies of Gower (Con)]

No, I do not agree that the Government have a gap in their industrial policy. Rail manufacturing plays a very important role in growing the UK economy and there is a strong pipeline of future orders for UK rail manufacturers, including upcoming procurements in the market being run by Northern, Chiltern, TransPennine and South- eastern. That competition process is open for all manufacturers to bid, including of course Alstom. The department is also working with His Majesty’s Treasury to set out a pipeline for expected rolling stock orders, to provide the sector with further clarity over the near term.

[Lord Grocott (Lab)]

My Lords, I think it was significant that there was no reference at all in the Minister’s Statement in the Commons to what I consider to be the inevitable consequences of the cancellation of the Crewe and Manchester sections of HS2: it is obvious that that was significant in terms of job losses. We already know about the losses that have occurred from money spent on both those projects that is now wasted because the line is not being built. What is the Government’s estimate of the loss of jobs in construction and manufacturing—which the Minister has focused on so far—as a direct result of the cancellation of those legs of HS2?

[Lord Davies of Gower (Con)]

I cannot comment on the construction side, but Alstom is part a contract with Hitachi to design, build and maintain the HS2 trains for phase 1 only—that is 54 trains. Phase 1 of HS2, between Birmingham and London, will continue, with, as I have said before, a rescoped Euston station. HS2 Ltd has written to the joint venture confirming that the original order for those 54 trains for phase 1 remains unchanged.

[Lord Sikka (Lab)]

My Lords, the managing director of Alstom has said:

“We have worked constructively with the Government on securing a sustainable future for Derby Litchurch Lane, but after 10 months of discussions we have run out of time, and the production lines have stopped”.


Can the Minister explain what exactly were the stumbling points in those 10 months and what efforts the Government have made to overcome them?

[Lord Davies of Gower (Con)]

Yes, I can. The Transport Secretary had a constructive meeting yesterday with Alstom’s chairman and chief executive officer and its UK and Ireland director. We are now in a period of intense discussion with the company on potential options to secure a sustainable future for Alstom’s Litchurch Lane factory. While it would not be appropriate for me to go into the details of those discussions at this stage, I know that the Transport Secretary plans to update both Houses at the appropriate time.

[Lord Berkeley (Lab)]

My Lords, the potential Alstom order from the Government for extra trains on the Elizabeth line is, allegedly, to cope with more passengers who will come off HS2 and want to go somewhere else on the Elizabeth line. Can the Government confirm that the new trains—it may be up to 10—will have toilets? In a recent incident on the Great Western, there were people stuck on trains for something like 10 hours without access to a toilet—and then they got criticised for jumping on to the track. Surely, in this day and age, the minimum should be to have at least one or two working toilets on such trains, which possibly go for two-hour or three-hour journeys.

[Lord Davies of Gower (Con)]

The noble Lord makes a very serious point. I am not able to confirm that now, but I will certainly look it up and write to him.

[Baroness Chapman of Darlington (Lab)]

My Lords, many of us here have campaigned hard to get the Hitachi factory in Newton Aycliffe. Hundreds of local people have had good jobs there for many years now. Is it not true that the Government have just not delivered the anticipated orders for trains that the factory was expecting? There are many young people who have taken career choices and studied at the university technical college there associated with Hitachi. It will be devastating for Newton Aycliffe, Darlington and the Tees Valley if anything happens to jeopardise the future of the factory. What message does the Minister have for that community, and what will he do to make sure that we keep those much-needed jobs?

[Lord Davies of Gower (Con)]

I can only repeat what I have just said. The Government are working very hard to make sure the company remains at the location. New competitions have recently commenced for rolling stock on Northern, Southeastern, TransPennine and Chiltern railway lines, as well as procurements for fleet upgrades on East Midlands, Chiltern and CrossCountry. Alstom is very capable, and able to compete for this work.

[Lord Grocott (Lab)]

Perhaps I could ask for a specific answer on this. The Minister referred to the rolling stock that has already been ordered in respect of London to Birmingham, but he cannot give an estimate of job losses following the cancellation. There clearly must be consequences for rolling stock when you do not build a railway to Crewe and Manchester that you planned to build. So can the Minister at least tell us how much rolling stock in total is not now going to be required and constructed as a result of the closure of the new railway?

[Lord Davies of Gower (Con)]

I cannot give the noble Lord that figure at the moment, but I will certainly look into it and come back to him.