East Midlands Rail Franchise

Lord McLoughlin Excerpts

Thursday 11th April 2019 Commons Chamber

[Andrew Jones]

There are a lot of questions there. First, Stagecoach has acknowledged to the Department that it had bid non-compliantly. We have received offers from other bidders in all competitions that are fully compliant in providing the required pension arrangements for railway workers so, to answer the hon. Gentleman’s question on whether this means the bid process is failing and others are refusing, clearly they are not because we have a compliant bid that won in good form.

Stagecoach is an experienced bidder and fully aware of the franchise competition rules, so it is regrettable that it submitted a non-compliant bid that breached the established rules. In doing so, Stagecoach is responsible for its own disqualification. Bidders were invited to bid on the basis of a pension deficit recovery mechanism. They knew that at the very start of the process[Official Report, 25 April 2019, Vol. 658, c. 8MC.]. Stagecoach did not accept it and made some amendments as it submitted the bid. On what would happen if all companies refuse, clearly, by definition, they are not all refusing, so the question does not apply.

We will see an entirely new fleet of trains—a full replacement fleet—come into service. Inter-city services will receive new bi-mode trains, and regional services will receive new diesel trains. The express fleet, which is the Corby-Bedford-London service, will receive new electric trains that offer significantly enhanced environmental improvements.

What is interesting in this franchise is that we will see the first trial of a hydrogen-powered train. [Hon. Members: “When?”] In terms of timing, we will see the new trains coming into service in a phased way. We hope to see the first trains coming in next year, and so on over the next three years.

The bidding process was conducted in a fair and consistent way, applying the rules of engagement equally to all bidders. We have provided feedback to those who have not been successful. The reasons are always commercially confidential. Losing bidders may publicise them if they wish, but we will not do that because they are commercially confidential. The key thing that we are seeing here is a franchise awarded in the typical way that franchises are awarded in our rail industry, delivering passenger benefits.

[Sir Patrick McLoughlin (Derbyshire Dales) (Con)]

I am rather surprised at the late withdrawal, or barring, of Stagecoach from this franchise. It seems to have come right at the end, so it is odd that my hon. Friend is saying that somehow Stagecoach knew it was non-compliant, because if the Department knew so early that it was non-compliant, one would have thought it would have been told quite some time ago. These franchise bids are not cheap to make and they are very expensive for the company.

Will my hon. Friend be more specific, as usually is the case, about where the new trains are coming from? If they are to be in operation from next year, presumably an order is about to be made very soon. Where will that order come from? I congratulate the Government on widening state ownership of the railways, albeit that of other states.

[Andrew Jones]

There were a number of points in my right hon. Friend’s question. As soon as the decision was taken on this franchise, all the bidders were notified. That is entirely standard. He has a great track record of delivering improvements across our rail network. Bidders were notified, of course, across all competitions, so that they did not incur extra costs. These things are expensive to operate, so this was awarded in a fair and consistent way.

Obviously, the contract to deliver the rolling stock will be between the successful bidder and its rolling stock provider, but we expect to see significant improvement in the rolling stock, and the feedback I have had from passengers along the line and from colleagues who serve along the line is that they are looking forward to seeing the benefits that those will bring.