Hitachi deal raises too many questions

The attempt to spin the Hitachi train deal as a British-led consortium clearly backfired given this morning’s press coverage.  As ever, thanks to the convoluted way that we do things in this country, what should be a straightforward good news story ends up being a complex tale of seemingly impenetrable deals that are impossible to evaluate.

Take the headline figure of £7.5bn. On the face of it, that seems to work out at around £5m per coach but since we have no idea of the precise number of trains and whether they will be electric or diesel, or of how much maintenance for a 30 year period will cost, it is absolutely impossible to work out whether this is a good deal or not.

Take, too, the issue of risk, barely mentioned at the press conference or the coverage. The whole idea of this deal is that the ridiculous named ‘Agility Trains’ will provide power by the hour on the various lines where these trains will be used. All the risk of manufacture, maintenance and availability will supposedly lie with the private sector suppliers. But these deals never work out like that, as the PPP for the London Underground all too obviously demonstrate. Moreover, any accountability is lost in the complexity and in the fact that once a preferred bidder is chosen, the successful team has the Department for Transport by the balls.

Take the question of how much of this train will be built in the UK. On pressing, the man from Agility admitted that one third of the work would be in Japan, one third in the UK and the rest in the world wide supply chain, some of which would be in the UK.  God knows where

Just think of all the things that can go wrong: this is a completely new train, with revolutionary ideas such as a diesel engine to boost power and to act as a back up, and costs could clearly soar. The risk of that will have been taken into account by the bidders and added to the cost, which will make this a very expensive deal.

Apparently, the losing bidder, the Siemens/Bombardier team, was asked to retender and managed to knock off 20 per cent off the cost and they still lost!

Why can’t we just buy off the shelf – modified for British conditions – trains with conventional contracts rather than trying to build in all the costs and risks into one massive complex deal that is bound to go wrong and that will result in a feeding frenzy for m’learned friends.

I wish I could be more positive about a deal that ultimately will probably deliver some wonderful trains which I might just be young enough to travel on before my dotage but there are more holes in this story than in a woodworm infested church roof – I’m sure you can spot others.

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