Nothing is ever simple on the railways. In most other industries, the requirement for new equipment, leads, in a straightforward manner, to a specification of what is needed and the placing of an order. This never happens in the railways because technical decisions soon become embroiled in wider political issues that raise financial problems that rebound back on technical questions. The cycle gets more and more vicious and no one, least of all government or industry leaders, manage to break out of it.
Certainly the saga of the Intercity Express Project, the replacement for the 125s that are heading off into their fourth decade of thundering up and down our main lines, fits snugly into this pattern. Indeed, there are some aspects of this story which would not be out of place in a West End farce, a rather long running one. It was back in 2005 that the decision was made to replace the 125s, but so far, with £27m spent on consultants, not a single carriage has been produced nor even, despite Philip Hammond’s statement to the House on March 1st, any ink been applied to a contract. While Hammond’s statement shed some light on the deal, it also left a lot of questions unanswered, not helped by the fact that in the subsequent debate the opposition failed to ask the right questions, and the fact that the announcement also included details of electrification plans which attracted most of the responses from MPs. That prompted the rather odd comment from Maria Eagle, the shadow transport secretary, that the government had promised to electrify to South Wales when, as Hammond pointed out, Cardiff happens to be in South Wales.
As originally conceived, the IEP was an all-singing all-dancing train, with three different versions, powered by electricity, diesel or both to enable them to run with diesel once the wires ran out. Three bidders originally entered the fray representing, as train builders, Hitachi, Bombardier/Siemens in a joint bid and Alstom who withdrew before putting in a tender. There have been numerous changes in specification, and much of the detail has remained under wraps, but throughout the process the train has needed to be everything – flexible, environmentally friendly, light, and good value. The order was put out to tender in November 2007 and after a protracted process, the government announced Hitachi as the preferred bidder with a train that came in six or more versions – essentially based on five and ten car sets, though with the flexibility to be any size.
This was a typical example, however, of the old British Rail practice of creating requirements with so many unique features that an entirely new train would have to be designed, rather than buying off the shelf. I remember talking a couple of years ago to a train manufacturer who told me that frankly they were not interested in bidding for the IEP because of the huge resource of engineering skills required in the design. Indeed, these IEP trains will probably be unique in the world, and therefore of little use in terms of R & D, which means inevitably that the price will reflect that.
A price, incidentally, that we will never know. Although the figure of £4.5bn has been bandied about, the trains will be leased in a power by the hour arrangement that will undoubtedly be expensive if, as the government suggests, it will pass on much of the risk to the manufacturer. Perhaps that’s why that even the government got cold feet about the viability of the scheme, and Lord Adonis commissioned Sir Andrew Foster, as former head of the Audit Commission, to carry out a review of the project.
Sir Andrew’s report, which was published in the autumn, was highly critical of the Department’s procurement procedures, stating in strong but just about diplomatic language ‘the review team and I have found it difficult to make sense of the multiple changes to programme specification over its lifetime, and their effects on Benefit Cost Ratios’ (the same BCRs, incidentally, being used to justify HS2 but that is another subject). He was also questioned the technical aspects of the scheme and the failure to examine sufficiently the alternatives.
When I blogged recently on my website suggesting that this was a crazy deal, I received a lengthy response from Alistair Dormer who defended the deal. He admitted that ‘the report by Sir Andrew Foster did highlight a number of alternatives to the Super Express’ but that the Secretary of State had ‘made it clear in the House of Commons that these alternatives had been investigated and that the Super Express delivered the highest value for money’. Moreover, the Foster review, he suggested, had helped the government get a better deal.
Leaving aside the question of why it took the Foster review to improve the offer, rail industry sources suggest that Hammond has had the wool pulled over his eyes in numerous ways and most specifically, on the question of why the design incorporates underfloor diesel engines when it would be far easier to simply have a locomotive haul the trains once the wires run out
There has been some simplification of the order, but the muddled thinking behind it does not seem to have been addressed. The diesel trains have been scrapped but more than 300 of the 533 carriages – just over a third of the original order and a strange number given that the trains will be in 5 coach units – are to be in hybrid trains. Everyone I talk to in the rail industry seems to think this is madness of the greatest order, based on a false notion – that it would be too slow to hitch up a diesel locomotive to the front of the train when the wires run out. Indeed, it has even been suggested to Hammond that it would be dangerous to have a diesel locomotive waiting at the appropriate place on the platform and therefore it would take nine minutes to connect the loco when, in fact, it could be done in less than half that time and would be a routine exercise provided there was the right signalling. Trains are hitched up and separated all the time on the Southern network.
Lumbering these trains with diesel engines plus fuel for 30 or more years with all the extra weight and consequently fuel that will be used seems a ludicrous idea just to save a few miles of electrification, but apparently Hammond was advised that it is the best option even though, according to Dormer, ‘Engines will only be switched on at the end of the wires and only under three of the five vehicles. This, combined with the fact that a large part of the Great Western Main Line will be electrified in future, means that the diesel engines will only be operational for only a small percentage of the time’.
The new specification is radically different from the original. All notion of flexibility, which was a key original requirement, has been lost. The trains will be fixed 5 coach lengths with, according to Hitachi, ‘an option for a 10 coach train’. Unless that option is taken up, for the most part there will be the extra operational expense of running two lots of catering equipment, as well as the waste of space involved in providing extra disabled access toilets, bike and wheelchair space, and so on. The whole idea seems as barmy as the 13 seater bicycle that I discovered had been used on the railway tracks for reconnaissance in the Boer War when researching my Engines of War book.
Then there is the question of risk transfer. Dormer told me: ‘The contract does transfer the risk of rolling stock availability and reliability etc to the train service provider (Agility Trains), although the key difference is that Agility will only receive full payment if demanding targets are met – rather than the “hell or high water” payments that are standard at present.’ We have been here so many times before. Surely the Department should have learnt, by now, that transferring risk to the private sector comes at a heavy price and when problems arise, suddenly the risk rematerialises in the public sector.
Behind the scenes, it is clear that the government is terrified that it could face legal challenge from any of the players involved. The failed bidders – or those who withdrew like Alstom on the basis that it was undeliverable – could challenge the decision on the basis that the specification has changed so radically since it was first put out to tender that the process should have been started. Neither would Hitachi – or Agility as the consortium is called – have taken kindly to a cancellation of the project.
Hammond’s announcement, therefore, seems little more than a holding statement, especially as he suggests darkly that ‘subject to the Government’s continuing to be satisfied that the proposal offers value for money as the commercial negotiations are concluded and that the final arrangements are compliant with the United Kingdom’s European Union obligations’. Indeed, there has already been outrage from UNIFE, which represents European rail suppliers, that the contract has been awarded to a firm from Japan, a country which, through the imposition of spurious safety rules and other restrictive practices, essentially manufacturers from Europe entering its home market. ‘ One senior rail industry source muttered darkly: ‘if this had been the original specification, then a different bidder might have won the deal’. The IEP saga , the most expensive rail procurement exercise in the history of the industry apart from the Public Private Partnership on the London Underground, will have many twists and turns before we see any of these shiny new trains, if we ever do.