I guess the point I was making is despite all the talk of the IEP▸ being a massive waste of money and fares having to rise massively to afford to operate them, it appears that FGW▸ considered it sensible to order some more - though I take the point about reduced costs due to the design now being practically 'off the shelf'.
I have represented the point about the IEP being a ^massive waste of money^ in this forum before and I continue to maintain that is the case. The reason is the way that the
DfT» has contracted Agility Trains to supply rolling stock in a Train Service Provision (
TSP▸ ) agreement in which all the risks connected with train design, manufacture, testing, operation and maintenance are passed to the manufacturer. No train - no pay.
On the surface of it, this is a good thing, but it can have unintended consequences. If one is not prepared to accept any risk at all then one will pay through the nose for the privilege of allowing other people to carry it. This is the railway equivalent of the now discredited PPP/PFI type of contract where the contractor supplies the capital for the project and the user pays a rent which reimburses the contractor for the capital, the financing costs of the capital and the daily use and maintenance of the facility.
The National Audit Office published a report on 9th July 2014 (
Procuring new trains HC 531 Session 2014-15 9 July 2014) which was openly critical of the way the DfT procured the IEP and Thameslink trains.
The financial figures included in the NAO^s report for the IEP were analysed by the transport journalist Roger Ford in the August 2014 edition of Modern Railways on pages 30 to 31. He concluded that the annual charge on the train operator for the Western^s tranche of trains will be some ^300 million (my rounding).
The Office of Rail Regulation (as was) publishes a range of statistics on railway use, costs and revenues. In its document entitled
^GB▸ rail industry financial information for the year ending 31 March 2014^ are included the annual rolling stock charges for the
TOCs▸ . Those for fGW amount to ^71 million. To this amount must be added the cost of daily maintenance, consumables (such as brake pads) and cleaning. In the
ORR» table is a heading ^Other operating expenditure^ which amounts to ^166 million for fGW which includes these, and many other, expenses. If it is assumed that half of this amount is for maintenance of the current fleet (to put the calculation on approximately the same basis as the IEP calculations) the direct cost of train operation comes to some ^150 million for the total fleet: that is
all the High Speed Trains and
all the trains required for the Thames Valley and Bristol suburban services, the Cotswold lines and the West Country.
In other words the annual cost of the IEP fleet looks to be double that which fGW currently pays for all of its trains.
In contrast the AT300 trains have been bought by Eversholt and the price quoted is the purchase price of the hardware. In the September 2015 issue of Modern Railways Roger Ford calculates that the monthly cost of ownership of these trains, that is lease rental to Eversholt plus maintenance, will be about half of that of an essentially identical vehicle contracted for by the DfT.
I attended a presentation made to the Railway Division of the IMechE on 27th June 2011. At that event one of the DfT^s civil servants responsible for the IEP, Stuart Baker, stated quite clearly that the charges for the trains would be paid by the TOC and guaranteed by the DfT.
This leaves the big open question as to how the difference between the monthly payments due for the Agility Trains^ vehicles and the Eversholt vehicles will be covered.
There are only two sources of money - the farepayers and the taxpayers. If fares are not to be increased then only the taxpayer comes into question. Either the subsidy paid to the TOC has to increase (or the premium paid is reduced) or the TOC pays the going rate for such a train and the taxpayer chips in the difference directly, but suitably disguised, via the DfT/Treasury.
Alternatively the TOC could play hard ball and order more AT300s to replace some or all of the IEPs leaving the DfT to make the TSP payments to Agility Trains by itself. That would be the nuclear option^!
The argument that increased traffic will pay for the higher TSP lease payments for the IEP is a nonsense - the difference is so large that the traffic growth of even 10% per annum would not cover it - it should not be forgotten that the higher payments start the moment the trains enter service - and anyway with such a growth rate the trains would run out of seats within a couple of years! The widely accepted view that electric operation is more economical is not born out by the fact that the TSP deal is more expensive that the current set up using diesel power.
I maintain that the current arrangement is unstable in the longer term and suggest that the DfT/Agility Trains contract will have to be reexamined. A possible move might be to obtain alternative quotes for the financing and for the maintenance separately - this will be cheaper than the current arrangement as the unknowns will reduce with a maturing programme. This could then mean that Agility Trains is reformed as a
ROSCO» (assuming it comes in with the best offer) and contracts the maintenance to Hitachi directly in the same way that the Class 395s were supplied by Hitachi and financed by a ROSCO (HBSC Rail) or the Class 390 Pendolinos were financed by Angel Trains and built and maintained by Alstom.
Something, somewhere, will have to give.
I've no doubt Hitachi's new manufacturing facility will also benefit the country oconsiderably over the coming decades which few people seem to acknowledge and wouldn't have happened had the IEP not happened.
As long as it remains a 'screwdriver' assembly plant then the economic benefits will continue to be limited. It will only become interesting when higher added-value activities take place there as well - design, prototype production, testing and manufacture of higher added-value components and systems such as the power electronics, motors, train management systems and so on.
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