High Peak Liberal DemocratsThere is now general agreement that the announcement that Siemens were the 'preferred bidder' for the Thameslink contract was down to financial considerations not technical. The Derby MP Margaret Beckett said as much on Saturday at the protest March (tacitly admitting her Labour colleague's responsibility) and others have said similar things.
On technical grounds Bombardier would have the advantage of a proven light-weight bogie design with 10 yrs operating experience. Siemens has put its tender in based on a 'paper' design. There must be some technical risk in this which will lead to some financial risk. Experience elsewhere suggests that this could lead to the contractor coming back to the government asking for extra money. The degree of technical (and hence financial risk) is outside the competence of anyone of us in the Lib Dems to judge.
On financial grounds, Bombardier claim they are competitive so far as capital cost is concerned, they are losing out on Siemens' ability to raise finance cheaper than Bombardier can. This is a PFI contract, the tender is not just to build the trains but also to support them for 30(?) years and provide the finance for building them. Siemens have a superior credit rating (one estimate is that it gives Siemens a 1.5% advantage in borrowing).
Vince Cable has stated that the contract was "narrowly constructed and was bound to lead to the outcome it did". This implies that Andrew Adonis, Geoff Hoon or whoever should have known they were setting Bombardier up for failure. Or perhaps their civil servants were the real architects of this situation. Consider that Adonis was Transport Secretary from June 2009 - May 2010, Minister of State for Transport October 2008 - June 2009. Hoon was Transport Secretary from October 2008 - June 2009, he was preceded by Ruth Kelly, June 2007 - October 2008 and she was preceded by Douglas Alexander from May 2006 - June 2007. None of them served for much more than a year!
It is now clear that the government does not have socio-economic data about the railway manufacturing sector; a Lab MP (Chris Williamson, Derby) tabled a question to this effect. It implies the Labour government lacked this data also.
The statements from Theresa Villiers and Phillip Hammond are that there are no alternatives, no going back, but why are they saying this? Is this really true? They are probably saying this because their civil servants are insisting it is so. But they would so insist if they were the architects of this tender document. In my experience people in power never like to admit to a mistake and rarely do they back-track and undo their mistakes. More likely they will plough on regardless (and compound the mistake). The statements that the government have no choice in the matter have been refuted (or at least disputed) by a document leaked by the press ("Trainbuilders Bombardier could still be awarded the contract to replace Thameslink's rolling stock, saving 1,200 jobs, the Daily Mail can reveal). Ministers at the Department of Transport have the power to bypass the current bidder Siemens and give the work to the 3,000 workers at Bombardier's Derby factory, according to Chairman Colin Walton. In an interview yesterday Walton said: 'We are the second bidder, and that means that, if for any reason they did not want to work with them, we would step up as the new preferred bidder. Transport Secretary Philip Hammond said at the time that he had no power to overturn the decision. But Walton said questions in Parliament had shown Hammond did have the power to reconsider the bid and bypass Siemens. He said: 'It now looks like the Secretary of State has a lot of questions to answer.' He added: 'I do find it completely incredible that nothing to do with socio-economics has been taken into account. They have had every option to do that in the invitation to tender.' A contract has not yet been signed and, according to Bombardier's Chairman, won't be until the end of the year.
It seems to me a second opinion is required regarding the legal options open to Phillip Hammond, but who can provide this second opinion? I have been told that Siemens are liable to £350m compensation if they don't get the order (not confirmed). If Bombardier closes, every single train, light railway and tram for the foreseeable future will have to be imported. £350m might be an acceptable price to pay to avoid this. Manchester University said it makes sense to award the contract to Bombardier once all the socio-economic factors have been taken into account.
The political situation: locally all three parties are on Bombardier's side. It is predictable that the local Labour MPs will oppose the awarding of the contract to Siemens. Not quite so predictable was the presence of the Conservative Leader of the City Council speaking at the protest march and a local Conservative MP (Nigel Mills, Amber valley) on TV recently.
The Press have been uniformly supportive of Bombardier's cause. This plus the insistence of the DfT that there is no alternative is making the government look almost perversely determined to do Bombardier down. Whether or not this is the reality of the situation is a moot point, but it looks bad. Blame for Bombardier's closure, if it happens, would fall squarely on the Coalition government; it does not look as if Labour will get much of the blame. In as much as there is any propaganda war / blame-game going on, Labour are winning it.
Siemen's track record for corruption has also been exposed in the media.
What is our next move? We still lack information about the nature and contents of the contract. Without this we cannot categorically refute anything the DfT says. It has been said that, even if the award went to Siemens up to 50% of the work could be put with Bombardier on a sub-contract basis if the DfT insisted. Can Phillip Hammond simply refuse to award the contract to anyone, simply abandon it and replace it with another tender (not on a PFI basis?). Is there a possibility that Transport for London might take over some of the suburban lines around London (including Thameslink?).
Steve Coltman, Chair, Assoc of Lib Dem Engineers & Scientists (ALDES)
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