DfT warned over purchase of £10.5bn train carriages

Highly critical report warns move could cost the state dear if passenger forecasts are wrong

An “inexperienced” Department for Transport has left the taxpayer with potentially huge liabilities after ordering 2,000 train carriages from Siemens and Hitachi, Parliament’s spending watchdog warns in a report to be released today.

The DfT took the unusual step of taking on the procurement of trains on the Bedford-to-Brighton Thameslink and the Intercity Express Programme, which will see 40-year-old diesel fleets on the Great Western and East Coast lines replaced by Hitachi’s 125mph electric trains.

Previously, rolling stock companies and train operators worked directly on buying the carriages, but ministers believed that the state was best placed to get value for money on purchases of this scale and complexity.

In a highly critical report from Margaret Hodge’s increasingly powerful Public Accounts Committee, to be published today, the DfT is warned that this will cost the state dear if passenger forecasts are wrong. The Government will be penalised if fewer people use the trains than expected, as it led the decision-making on how many and what type of trains were needed and will have to pick up any financial shortfall from trains not running.

Predicting passenger numbers is a notoriously difficult task. For example, two years ago there were only a third of the number of people using High Speed One than had been predicted in 1995.

“The Department for Transport’s decision to buy the new trains for Intercity Express and Thameslink itself has left the taxpayer bearing all the risk,” Ms Hodge said. “The Department has no previous experience of running a procurement of this kind, let alone two with a combined value of £10.5bn.”

Ms Hodge also criticised the way the Intercity programme was managed, pointing out that officials had attracted only one bidder, meaning a lack of competitive tension.

“The Department had begun the procurement without a clear idea of how many trains would be needed, which routes they would run on and what form of power would be required,” the Labour MP said. “In 2009 it had to change the specification for the trains so that they could handle both diesel and electrified options, which is likely to mean higher fares for passengers.”

The committee was also angry that Siemens’ Thameslink carriages will not be built in the UK. The Intercity carriages will be built at Hitachi’s Newton Aycliffe factory in County Durham.