Railways: Public Procurement

Earl of Mar and Kellie Excerpts

Tuesday 30th November 2010 Grand Committee

[The Earl of Mar and Kellie]

My Lords, I thank the noble Baroness for introducing this Question for Short Debate. She has certainly hooked me on railways. I shall mention one or two points about railway procurement, starting off with vehicles and moving on to franchise procurement, along with one or two problems which I think are occurring at present in this context.

The first thing, which is surprising after what was expected in 1994, is the amount of control that the Department for Transport has of rolling stock and dealing with the cascades, the specifications and electrification. That may not be surprising, but I do not think that it was the original idea. The second point concerns the rolling stock companies, or roscos. This is the one point of railway privatisation that British Rail would have liked, but now it has been shown that, broadly speaking, they do not accept risk; they want guarantees that the vehicles that they own will be used for the whole of their life. I cannot say that I am against the idea of vehicles being used for the whole of their life—after all, railway vehicles have a life of at least 40 years. That means that decisions made now will last well into the future. Unfortunately, rail vehicle procurement is somewhat stymied and paralysed until the Government decide what is to happen next. The roscos are not bringing in new stock for fear that it might not be needed for the full 40 years. That paralysis leads to problems for the rail vehicle builders, which would love to have a continuous flow of work but clearly do not. One joy of our historic position in the railways is that we have a smaller loading gauge than anywhere else. Therefore, there are no foreign, off-the-peg vehicles to buy, although of course British rolling stock can be used on the continent—albeit it looks rather smaller.

Then there is, yet again, the delay with the intercity express programme—the IEP. That means that the lives of the high-speed trains, or HSTs, have to be extended. It strikes me that we will be using them on the main line for up to 40 years at the rate we are going. They are good trains but it will be interesting to see what they are like when they are 40 years old.

On a franchising rather than vehicle procurement issue, there is what I consider to be the clumsy handling of the Pendolino integration. I understand that Virgin asked for a franchise extension in exchange for integrating the new Pendolino carriages, extending them by an extra two carriages per train and bringing into service four new trains. I understand that it wanted a franchise extension but the DfT did not want to give it one. Although I am certain that there is right on both sides, it would be better if the existing franchisees—the people who have been handling those trains for the past few years—handled the integration of the new carriages rather than handing it to a new franchisee.

My sixth point on vehicle procurement—my noble friend will not be surprised to hear me mention this yet again—is the desirability of having trains that are suitable for tourist routes. I understand that they must be cascaded, but it is very important that on the scenic lines throughout the British mainland we get some straightforward window and seat alignment so that people can take advantage of the scenic potential of tourist and holiday railways.

My time is, unfortunately, coming to an end. On franchising, I should like to pick up the point about competition. There is rarely competition within franchise procurement. Usually, it is the allocation of regional or, in the case of Scotland, national fiefdoms. I am one of the few people who has competition, at least in theory, because, living equidistant between Edinburgh and Glasgow, I can come to your Lordships’ House with either Virgin or East Coast Trains—or, if I were being really pedantic, I could go down to Carlisle and then go from Carlisle to Leeds with Northern and then East Coast Trains, but even I want to get here.

The franchise context has changed. Initially it was all about entrepreneurialism; now it has become entrepreneurialism in the context of the death of the railways. The most important thing, which has really muddled the situation, is that people might want to travel by train. Railways are back on the up and the franchise context is now about management contracts rather than entrepreneurialism.

Finally, how happy are the Minister and his department with the way that the franchising process has been wandering about, accidentally arriving where it is now? Does he have a clear idea of where he would like franchising to go?