East Midlands Rail Franchise

Andy McDonald Excerpts

Tuesday 7th May 2019 Commons Chamber

[Andy McDonald (Middlesbrough) (Lab)(Urgent Question)]

To ask the Secretary of State for Transport to update the House on the bidding process for the East Midlands rail franchise.

[The Parliamentary Under-Secretary of State for Transport (Andrew Jones)]

As has previously been confirmed in a written ministerial statement and at the Dispatch Box on several occasions, Abellio was awarded the contract after presenting the Department with a compliant bid, following a rigorous competition that was consistent with public procurement rules. Our assessment of bids has been comprehensive and fair and I have absolute confidence in the process. It was a fair, open competition and Abellio provided the best bid for passengers, in which it demonstrated that it would not only meet but exceed the Department’s specifications. The Department’s procurement process is absolutely clear: submitting a non-compliant bid that rejected the commercial terms on offer, as Stagecoach chose to do, can lead to disqualification.

We have a winner. Abellio won the competition with a compliant bid. We are currently in the standstill period, which is a standard part of procurement practice. Within that period, the Department is able to answer unsuccessful or disqualified bidders’ questions, enabling them fully to understand the details of the decision that has been made. Towards the end of the standstill period, the Department received a request for further information from one of the bidders and, in view of that, we decided to extend the period until tomorrow, 8 May. After that, we will be looking forward to the mobilisation from the successful bidder, which will lead to improved services for those who use the East Midlands franchise. Abellio will invest more than £600 million in trains and stations between August this year and 2027. Meanwhile, the Government will continue their £1.5 billion upgrade of the midland main line, which is the biggest upgrade since its completion in 1870. That is part of our £48 billion investment to modernise our railways over the next five years.

[Andy McDonald]

During Transport questions last Thursday, the shadow rail Minister, my hon. Friend the Member for York Central (Rachael Maskell), asked about the non-compliance of bidders for the East Midlands rail franchise. The Transport Secretary, who is not present, dismissed her questions as inaccurate and incorrect. However, according to a formal legal disclosure from the Department for Transport, which was published on 15 April and sent with the full authority of the Secretary of State,

“All bids contained some non-compliances.”

The ministerial code requires Ministers to make truthful and accurate statements to Parliament, so will the Transport Secretary now correct the record and rectify the inaccurate and incorrect statement that he made to the House last week?

Given that all bidders for East Midlands were non-compliant, will the Minister tell us how the non-compliances of the respective bidders were assessed? The Department has mandatory and discretionary levers over non- compliances in franchise bids. Can the Minister explain how the criteria were applied during the evaluation of bids for East Midlands?

The leak of the Stagecoach bid details to Abellio during the bidding casts further doubt on the integrity of the process. Why did it take months for the data-breach investigation to start and why was it so limited? Given last week’s cancellation of the ferry contracts and now this latest debacle, is there not serious doubt about the Transport Secretary’s ability to procure services? Will the Minister’s boss sign off the East Midlands franchise contract this week, in view of the serious concerns about the transparency of the process? Given the appalling record of defending legal challenges to failed procurement decisions—Eurotunnel and P&O being cases in point—what contingency plans are there to defend future legal action against the East Midlands award?

In 2012, rail franchising went into meltdown on the west coast main line. Seven years on, it has never been clearer that it is not working and will never work. It needs to end, and to end now.

[Andrew Jones]

Let me deal with the hon. Gentleman’s questions one at a time. In a complex procurement process such as this, or indeed in other complex public sector procurements, it is a matter of course that there may be small technical non-compliances. These could include, for example, incorrect font sizes or submitting bids in the wrong format—in docx rather than in PDF, or vice versa. This does not constitute a material non-compliance, which would affect the compliance of the bid as a whole. What would be a serious issue would be something like the reallocation of risk, or acceptance or non-acceptance of the commercial terms that have been offered. That is where the difference between material and non-material would come in.

We have been clear at the outset that non-compliance risks exclusion and Stagecoach chose to put in a materially non-compliant bid rejecting the commercial terms on offer. In doing so, it is responsible for its own disqualification.

On the bid leak, I am aware that an email was sent incorrectly by Network Rail, which was received by one of the bidders, but that has been investigated and it was proved in that investigation that the email was not opened and none of the information that was possibly within it was accessed, so it has not been material to this award.

The hon. Gentleman said that franchising is dead and buried. I could not disagree more. Franchising has been a significant part of the turnaround of our rail industry. It has led to more entrants into the market. It has led to investment from the private sector. It has led to over £10 billion of investment. It has led to a renewal of focus on customers in the rail sector. It has been an ingredient in the turnaround we have seen, with the more than doubling of passenger journeys on our railways over the past 20 and a bit years. So franchising has been a success. We of course need to evolve it because what we face now is how to take the process on to the next stages. That is the question that the Williams review has been tasked to solve.

Mr Williams is starting to give us some of his thinking. He has made speeches at various rail conferences. We look forward to receiving his report in the early summer, with a view to a White Paper in the autumn.

The comment from the hon. Gentleman was that the Secretary of State had misled the House. The Abellio bid was won in a competitive franchise process and it won with a compliant bid. The comments by the Secretary of State were, therefore, accurate. I am aware of the media story, but it is wrong. He does not need to correct the record. The Abellio bid was compliant and has been won in an open, fair and consistent way. We look forward to seeing the benefits of that for the passengers on the East Midlands network.