Thameslink and Crossrail Contracts

Norman Baker Excerpts

Tuesday 20th November 2012 Westminster Hall

[The Parliamentary Under-Secretary of State for Transport (Norman Baker)]

Thank you very much for calling me to speak, Mr Howarth. I will do my best in the 10 minutes or so available to try to answer as many points as I can.

First, I welcome this debate on Thameslink and Crossrail, two schemes that are of great importance to this country’s rail industry and, more widely, to supporting growth and jobs. I know that the hon. Member for Derby North (Chris Williamson) has been an active campaigner on behalf of Bombardier, which is natural, as it is situated in his constituency and city, and the company of course plays a key role in Derby’s economy. I am pleased to respond to this Adjournment debate on a subject that I know is of great importance to him and his constituents. I am especially pleased to do so in the week after Southern announced that it intends to exercise an option for 40 new Electrostar carriages from Bombardier, which I am surprised he did not mention.

Let me start by saying that rail is a success story and this coalition Government is committed to continuing to invest in the success of rail. Since the 1990s, both the number of passenger miles and passenger journeys on rail have nearly doubled. In the same period, use of rail freight has expanded by more than 60%, and in the past decade we have seen significant increases in passenger satisfaction and train punctuality. However, this Government requires, and is driving, even more improvement. We are investing £18 billion in this spending review period alone on a programme of rail improvements as large in scale as anything seen since the 19th century.

In Derby, the Department for Transport is investing in transport improvements, including investing £4.9 million from the local sustainable transport fund; more than £2 million from the better bus area fund; more than £8 million in highway maintenance and pothole repairs; and more than £9 million as part of the integrated transport block. We have also provisionally approved a £4.4 million contribution to a replacement road-over-rail bridge over the Derby to Birmingham railway line.

Thameslink is an urgently needed programme that will provide additional capacity for key London commuter routes and relieve overcrowding on the London underground. It includes major infrastructure works at key London stations, including the complete modernisation of London Bridge station and the procurement of next-generation rolling stock. In time, it will include changes to franchise arrangements to support delivery of the service.

Thameslink is already making a difference to passengers. Farringdon and Blackfriars stations have been transformed, platforms along the route have been extended to support new 12-car services, and enabling works have begun on the reconstruction of London Bridge station and its approach tracks. I take this opportunity to commend the industry, and especially Network Rail, for the work that has been done to upgrade Blackfriars, which was unique in scale and difficulty. I saw that work at first hand and thought that they did a fantastic job.

As the hon. Gentleman highlighted, there have been delays in awarding the Thameslink rolling stock contract. The Thameslink train order is a significant investment and the detailed contract terms need to be right, so that we can meet the demanding customer and performance requirements of this next-generation rolling stock. The contract places much greater responsibility for the train’s performance in service on the train manufacturer and maintainer than has been the case traditionally. That is the right thing to do, and given the size of this order, it takes time to get the detailed contract documentation completed. The Government is confident that it is very close to final agreement of these commercial arrangements, and we expect to be able to conclude the associated documentation by the end of this year.

As the hon. Gentleman stated, we recently revised our target date for achieving financial close to early in the new year. Of course, agreement on financing has to come after agreement on commercial arrangements, and we have to allow a proper period for the rating agency and banks to perform their due diligence. As he will appreciate, the lending environment remains challenging for all projects. Notwithstanding that background, Siemens remains confident that the funds can be secured for Thameslink.

Members will know that the Government has recently paused existing franchise procurements, including for the new Thameslink franchise, while reviews take place of the serious errors that were uncovered on the west coast main line franchise competition. The Government is wholly committed to learning the lessons from that episode, but Members will appreciate that I cannot pre-empt the findings of the independent inquiries looking into those matters.

Regarding train fleets, however, I am quite clear that the key features needed by the new Thameslink trains are those that support the demanding performance requirements needed to operate a high-frequency service through the central core between Farringdon and St Pancras of up to 24 trains per hour in either direction. Those are very different train performance requirements from those needed by trains on other routes operated by Southern. Hence, a different train fleet is required for Thameslink.

There has been some question whether there will be sufficient electric trains from the existing Thameslink programme to support all the announced electrification schemes; I think the hon. Gentleman has raised that issue in parliamentary questions. Let me be clear that the Government’s electrification programme covers both regional and commuter services, alongside long-distance, high-speed services for passengers and freight. The existing Thameslink rolling stock will be cascaded to regional and commuter lines, the very uses that it was designed to be suitable for. Overall, there is sufficient cascaded stock available to meet the needs of the electrification programme. We are working with our industry partners to ensure that that rolling stock is made available in time for the electrification of the routes.

Thameslink is also good news for jobs. The rolling stock contract will support the creation of an estimated 2,000 jobs in the UK, supporting manufacture of train components, construction of depots and subsequent maintenance of the new fleet of trains.

[Chris Williamson]

Will the Minister give way?

[Norman Baker]

I will give way shortly.

In addition, at the peak of construction activity, we expect an additional 3,000 people to be employed directly on the Thameslink infrastructure works as a whole, with as many people again employed in related jobs in the wider community. I am happy to give way now to the hon. Gentleman, but he asked me a lot of questions and left me only 10 minutes to respond.

[Chris Williamson]

I beg the Minister’s pardon, but will he concede that the 2,000 jobs that he referred to a few moments ago would be created whoever won the contract, including Bombardier?

[Norman Baker]

Of course—I am absolutely happy to accept that. I welcome new jobs wherever they are created in this country. These are train-related jobs that help both the rail industry and the wider economy.

At this point, I will try to answer some of the questions that the hon. Gentleman put. Some were related to the past, and I take the point made by my hon. Friend the Member for Hendon (Dr Offord) that the hon. Gentleman’s speech was largely about the past, rather than the future.

The hon. Gentleman asked specifically about Siemens and read out extracts from the legislation relating to the position that he thinks applies in this case. I should make it clear that for convictions to give rise to the requirement to exclude Siemens plc from the Thameslink rolling stock project, those individuals involved in the activities that resulted in convictions would need to be in a position of power, representation, decision or control of Siemens plc. The Department investigated the position at the pre-qualification stage and was satisfied that that was not the case. Consequently, we can reiterate that the Department does not consider there were grounds to exclude Siemens plc from the Thameslink rolling stock contract.

The hon. Gentleman also mentioned Crossrail, of course, as he looked to the future. Before discussing Crossrail, I should finish talking about Thameslink by referring to the point made by my hon. Friend the Member for Hendon in an intervention on the hon. Gentleman. My hon. Friend’s point was that Thameslink was largely done and dusted by the time that this Administration came to power and, to use the phrase that I think my right hon. Friend the Secretary of State for Defence used at the time, when he was Secretary of State for Transport, all he did was “open the envelope”. That is the consequence of that particular process.

Moving on to Crossrail, the £14.5 billion Crossrail project will create vital new transport infrastructure to support economic growth. The project will deliver a 74-mile railway; 13 miles of new tunnels under London; new, expanded or upgraded stations along the Crossrail route; and a new fleet of trains. When the project is complete, Crossrail services will run from Maidenhead and Heathrow in the west to Shenfield and Abbeywood in the east. For the millions of people who will use its services, Crossrail will deliver faster journey times and better connectivity, while reducing overcrowding on other services. Overall, it will provide a 10% uplift in London’s rail transport capacity. Crossrail is not only great news for passengers, but good news for the economy, as it will support growth and the UK’s long-term competitiveness. Crossrail will provide 14,000 jobs at the peak of construction and is predicted to facilitate employment growth of up to 30,000 jobs by 2026.

The Government, working with Transport for London as its co-sponsor, established Crossrail Ltd as a single-purpose delivery body for the Crossrail project. Crossrail Ltd is responsible for procuring the many contracts needed to deliver the project, the largest of those being the contract for an initial order of around 600 new carriages—the exact number is a matter for the bidders—and a new depot at Old Oak Common. The contract is expected to be worth in the region of £1 billion and is likely to include options to allow TfL to expand the fleet in future years to accommodate demand and respond to possible changes, such as High Speed 2. The procurement of Crossrail’s rolling stock marks the beginning of Crossrail’s transition from Europe’s largest engineering project to an operational, world-class railway. These will be modern, high-capacity trains that replace many older, inner-suburban trains that run into Paddington and Liverpool Street.

Our priority is to deliver that new railway, which so many people are looking forward to, on schedule and to ensure that we do so as efficiently as possible, with value for money for the taxpayer and future fare payers always in mind. We are clear that we want to secure the right train at the right price to deliver the benefits of Crossrail to London and the south-east. The only way to achieve that is through a strong and fair procurement policy. Four bidders—Bombardier, CAF of Spain, Hitachi and Siemens—submitted first-round bids by the deadline of 29 October. I have no knowledge of what is in the bids, but I hope that Bombardier, along with the other bidders, has submitted a strong, competitive bid that meets the exacting requirements of Crossrail. I am sure that the hon. Member for Derby North would like us to follow proper EU procurement policy and rules.

Those first-round bids are being assessed by Crossrail Ltd. It expects to be in a position to shortlist bidders next spring, so as to move to the next stage of the competition. It is hoped that a preferred bidder will be announced later next year, with the project moving to financial close in 2014. The first train is expected to enter service between Liverpool Street and Shenfield—the first section of the Crossrail route that will be operated by TfL—in 2017. The full Crossrail service is expected to be fully operational in late 2019, with the central tunnel section opening in advance of that.