East Midlands, South Eastern & West Coast Franchise Updates April 2019

[whole diary]

[Electric train]

Being the ever sceptical, have the DfT^» (Department for Transport - about) looked with a fine tooth comb for a non compliance as an excuse to boot Stagecoach following the East Coast Fiasco?

I'm not sure that's the case. It sounds as though bidders have (with the exception of Abellio) walked away from the government who changed the goalposts and asked them to take on future increases in pension costs. So, South Eastern has had no "complaint bids" and remains unlet, but the government got luck with East Midlands and Abellio.

I've seen comment that the risks and costs involved could dwarf the expected profits bidders would hope to make. Also, that if the government succeeds in transferring the pension costs, that will itself cause the costs to rise as the train operators are considered by the pensions regulator less secure than the government, so it will demand more money be put into the funds. Just what the bidders are worried about.

So, all rather complicated, but I can see why most bidders seem to have run a mile. I wonder whether Abellio still thinks it has done the right thing, and if the Dutch government thinks so too.   

If you look at Abellio web site and their statement in "The Abellio Way"

175 years of experience has embedded in Abellio a social duty to passengers which extends beyond the journey on one of our trains, trams or buses. The passenger is at the heart of everything we do. The delivery of safe, reliable and comfortable services is the starting point for every transport provider, but that is not enough for Abellio. Our services must play an integrated role in the socio-economic development of the societies we serve. 

They are perhaps less motivated about profit looks like they are part of NS.  We are more likely to see the likes of SNCF^▸ (Societe Nationale des Chemins de fer Francais - French National Railways) and DB^» (Deutsche Bahn - German State Railway - about) buying into UK^▸ (United Kingdom) railway especially when (if) we leave the EU^» (European Union - about) because will not be able to contest EU state "owned" companies taking up contracts in the UK via the ECJ …………….. that is what taking back control is all about ….. isn't it 

[Lee]

Stagecoach demands ‘full and transparent explanation’ over pensions ruling - http://railnews.mobi/news/2019/04/15-stagecoach-demands-full-and-transparent.html

[JayMac]

We are more likely to see the likes of SNCF^▸ (Societe Nationale des Chemins de fer Francais - French National Railways) and DB^» (Deutsche Bahn - German State Railway - about) buying into UK^▸ (United Kingdom) railway

Deutsche Bahn are looking to sell their UK based subsidiary, Arriva.

SNCF do not operate, and have never bid for, franchises in their own right. They've only ever been a minority partner in bids. Their subsidiary Keolis (which they 70% own) operates one heavy rail franchise in the UK, Transport for Wales, but that is a joint 50/50 partnership with Amey. Keolis are also minority partners in Govia, the operators of the Govia Thameslink Railway and Southeastern franchises.

SNCF's involvement in UK heavy rail is very diluted. To the extent that UK listed companies are the majority partner in any venture they are involved in. I don't see that changing.

[grahame]

See http://www.firstgreatwestern.info/coffeeshop/index.php?topic=20844.msg262945#msg262945 ... Stagecoach looking at buying Arriva ...

[Lee]

DfT^» (Department for Transport - about) deadline for pensions explanation is just hours away, with MPs^▸ (Member of Parliament) Committee for Work and Pensions also now involved - http://railnews.mobi/news/2019/04/16-dft-deadline-for-pensions-explanation.html

[grahame]

DfT^» (Department for Transport - about) deadline for pensions explanation is just hours away, with MPs^▸ (Member of Parliament) Committee for Work and Pensions also now involved - http://railnews.mobi/news/2019/04/16-dft-deadline-for-pensions-explanation.html

A further update from the same source - https://www.railnews.co.uk/news/2019/04/17-dft-responds-to-stagecoach-demands.html

THE Department for Transport has responded to the demand from Stagecoach Group for a ‘prompt, full and transparent response to help restore public confidence’ after three franchise bids from the Group were rejected on the grounds that they attempted to reduce pensions risk.

It had been reported that the deadline was 16.00 on 16 April, but Stagecoach has now clarified that the deadline was actually 24 hours earlier, and that a response has been received.

However, the matter appears to be far from settled.

A spokesman for Stagecoach said: ‘We can confirm we have received a letter from the DfT, which we are reviewing in detail. However, we consider the response to our questions to be both vague and incomplete, leaving many of the fundamental issues and concerns raised by ourselves and other parties unaddressed.’

Stagecoach has been told that its bids for East Midlands, South Eastern and West Coast Partnership have all been rejected, because its alternative proposals for pensions were not acceptable to the government.

The full text of the DfT response to Stagecoach has not been published.

It has also been confirmed that Arriva was also barred from bidding for East Midlands, again because it had attempted to reduce the pensions risk, leaving Abellio as the only contender.

Stagecoach has asked that the confirmation of the Abellio award, which would normally follow after a ten-day standstill period, be delayed by a further fourteen days. Again, it is not yet known whether the DfT has agreed to this.

[bradshaw]

The plot thickens, apparently ‘Stagecoach has called for an inquiry into the way rail franchises are awarded, after details of a bid it submitted were sent to a rival’.

https://www.bbc.co.uk/news/business-47990807

[LiskeardRich]

So Stagecoach didn’t comply with the ITT^▸ (Invitation to Tender). Doesn’t like it when the DfT^» (Department for Transport - about) called their bluff. Sound like bad losers?

[grahame]

So Stagecoach didn’t comply with the ITT^▸ (Invitation to Tender). Doesn’t like it when the DfT^» (Department for Transport - about) called their bluff. Sound like bad losers?

Neither side comes out smelling of roses ... it also strikes me as pretty poor practise to put out an ITT which so many bidders don't copy with that it reduces the bidder pool to an impractically small group (or singleton).  Unless, of course, that decision to write the ITT in that way was or is part of a bigger plan.

[Electric train]

So Stagecoach didn’t comply with the ITT^▸ (Invitation to Tender). Doesn’t like it when the DfT^» (Department for Transport - about) called their bluff. Sound like bad losers?

Neither side comes out smelling of roses ... it also strikes me as pretty poor practise to put out an ITT which so many bidders don't copy with that it reduces the bidder pool to an impractically small group (or singleton).  Unless, of course, that decision to write the ITT in that way was or is part of a bigger plan.

Its part of a bigger plan …………. UK^▸ (United Kingdom) Government particularly the flavour we have at the moment want to substantially reduce the Tax payers contribution the Governments view is the railways should be totally self funding; the only public money would be to support a social need.

So the DfT ITT for TOC^▸ (Train Operating Company)'s and the NR^» (Network Rail - home page) CP6^▸ (Control Period 6 - The five year period between 2019 and 2024) are more in that vain, the NR CP7 will I am sure have a heavier reliance on the railways seeking external investors; a couple of examples to watch will be East Corydon Stn and Clapham Jcn Stn redevelopment which are being worked on now in readiness for CP7 and 8

[Celestial]

So Stagecoach didn’t comply with the ITT^▸ (Invitation to Tender). Doesn’t like it when the DfT^» (Department for Transport - about) called their bluff. Sound like bad losers?

So they threatened to sue DfT in 2012 over the loss of the West Coast franchise and were proved right within a couple of days, despite the government protesting otherwise before it admitted it had screwed up.  Bad losers then?

Also, I think I'd be sore if I learnt that my bid details had been passed to the winning bidder two weeks before final bids were due in.  Can the government really be sure that the email attachment wasn't opened, as they say.

Even if they were allowed access to Abellio's computers to check (which I doubt), could forensics spot if an email was opened on a home computer, and the attachment copied onto that computer rather than opened.

[Timmer]

From BBC^» (British Broadcasting Corporation - home page) South’s Transport Correspondent Paul Clifton on Twitter:
https://twitter.com/paulcliftonbbc/status/1126141356785717248?s=21

Legal action launched against @transportgovuk by @stagecoachgroup over “opaque decision making” following exclusion from three franchise bids.

[Timmer]

More on the decision by Stagecoach to go to the High Court:
https://www.railwaygazette.com/news/news/uk/single-view/view/stagecoach-goes-to-court-over-east-midlands-franchise-disqualification.html

Stagecoach Group commenced legal action against the Department for Transport on May 8, preventing the award of the next East Midlands franchise to NS subsidiary Abellio which had been named the preferred bidder on April 10. The initial 10-day standstill period had already been extended, and was due to expire at midnight on May 8.

Stagecoach has issued its claim at the High Court in London under Part 7 of the Civil Procedure Rules, alleging that DfT^» (Department for Transport - about) breached its statutory duties under Regulation 1370/2007, which requires the government to adopt a competitive tendering process which is open to all operators, fair, transparent and non-discriminatory.

Incumbent Stagecoach was disqualified from the East Midlands bidding process after its bid was deemed non-compliant. The issue centres on the way the next franchise would change the allocation of financial risk associated with the industry-wide Railways Pension Scheme.

Continues...

[grahame]

From UK^▸ (United Kingdom) parliament - Commons select committees

Background

Further to the announcement that the East Midlands franchise had been awarded to Abellio on 10 April, the Transport Committee and Work and Pensions Committee united to write to the Secretary of State for Transport, Chris Grayling MP^▸ (Member of Parliament) with eight questions.

Chair of the Transport Committee, Lilian Greenwood MP:

“These issues raise serious questions for the future of the franchising system. We’ll be putting these questions to the rail minister, Andrew Jones MP, in our evidence session this morning.”

Chair of the Work and Pensions Committee, Frank Field MP:

“What a wretched mess, for pension scheme members and commuters alike – no clear plan for fixing it and a multi-billion pound obstacle on the track. Let’s hope the Rail Minister has some answers this morning.”

Site contains correspondence ...

[Lee]

La la la, they cant hear you...

https://www.nottinghampost.com/news/local-news/abellio-confirmed-new-operator-east-2851466

A Department for Transport spokeswoman added: "We have now signed the contract confirming Abellio as the new operator of East Midlands Railway from August 2019.