Question to the Department for Transport:

To ask the Secretary of State for Transport, pursuant to the Answer of 25 May 2021 to Question 4674, for what reason there is provision in the contract for trains operating on London North Eastern Railway for the operator to engage with Hitachi in relation to potential redundancies; when that provision was agreed; and what assessment he has made of the effect of that matter on value for money.

When the InterCity Express Trains were introduced on the East Coast line, daily train maintenance responsibilities passed from the train operator to Hitachi.

As part of that transfer, staff previously engaged in train maintenance underwent Transfer of Undertakings (Protection of Employment) into Hitachi, but the contract allowed for Hitachi to review how it managed its maintenance teams and had provision for Hitachi to restructure if necessary. To mitigate any uncertainties around the impact of any changes being reflected in additional unknown costs to Hitachi, (which would have resulted in a risk premium from Hitachi), the Department agreed that some of the costs in restructuring would be funded by London North Eastern Railway, in its role as the previous employer.

From a Value for Money perspective, these were unknown costs at the time of the contract award, and therefore the decision was made (in part for Value for Money, which was considered at an overall contract level) that it is better that these costs be priced as / when / if they occur, rather than priced seven plus years ahead by Hitachi.