As I suggested less than three weeks ago, the recent decision by Chris Grayling’s accident prone Department for Transport, which saw incumbent operator Virgin Trains excluded from bidding for the West Coast Partnership, and saw Stagecoach Group barred from re-bidding for its East Midlands Trains operation, was always likely to end up with the lawyers. And in double-quick time, that is indeed where it has ended up.
The first reaction to those decisions by Roger Ford of Modern Railways magazine was ominous: “Having watched a hapless Transport Minister floundering under a barrage of some well briefed questions in Parliament, I can sniff an action replay of the 2012 Intercity West Coast franchise award scandal in the making”. Zelo Street regulars may remember the DfT effectively admitting that its franchising process was not fit for purpose.
Why this has happened is that the DfT is trying to move future pension risks - the railway pension scheme is estimated to be around £7.5 billion in deficit - on to franchisees. The potential franchisees have seen the DfT coming, and some have modified their franchise bids accordingly. The DfT has in turn barred them from bidding.
So it is that the lawyers have been called in. First, predictably, came Stagecoach Group, who alleged “the East Midlands franchising process breached requirements that the contract award should be ‘fair, transparent and non-discriminatory’”. Moreover, “The company said it was also preparing a claim for a judicial review over the East Midlands contract, as it warned the DfT that it was considering legal action over West Coast and South Eastern”. So no change yet on West Coast, as I warned.
But now the Grayling in-tray has had another legal challenge added to it, as the Guardian has reported. “Chris Grayling’s embattled transport ministry faces a second legal challenge over the way the East Midlands rail franchise was awarded, from Arriva Rail, owned by Germany’s state-backed Deutsche Bahn … The claim, filed at the high court last week, will pit the UK and German governments against each other and could lead to the transport secretary being called to court to give evidence”. That’ll be fun.
While Grayling is being grilled, perhaps he can explain this one: “Stagecoach was also angered that information on its bid was leaked to Abellio, which runs five other UK rail franchises, before the Dutch company won the contract”. Abellio was effectively last bidder remaining for East Midlands, after everyone else was barred, and so secured the franchise effectively by default. Also, there was an ominous coda.
“An Arriva spokesperson said: ‘We can confirm that we are seeking to obtain more information relating to how the bids for the East Midlands franchise were assessed.’” It was full disclosure of the bids for Intercity West Coast that exposed the DfT’s ineptitude back in 2012 and led to the franchise award process being junked.
Whatever happens, more taxpayers’ cash will be expended. Some may wonder what on earth rail franchising is about, on which I give the last word to Roger Ford. “Perceptive thought from Andrew Haines: franchising is not broken, it is exhausted. Complements my other apposite one liner ‘it's not broken, it was designed like that’”.
And little will happen to improve matters - given the mainstream media isn’t interested.
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