Derby, Bombardier and lessons for Government

The award of a £1.4bn contract to Bombardier's rival Siemens seemed to threaten the existence of Britain's last remaining train-maker. 1200 workers were being laid off by Bombardier with more losses in the supply chain. The award to Siemens was all the more galling as it followed statements by politicians of all parties saying how important it is that we boost our manufacturing sector.

Two salient points have emerged regarding the Labour Government's tender process. Firstly, they set this up as a 'Private Finance Initiative' and secondly that they used the 'Utilities Contract Regulations' rather than the 'Public Contracts Regulations'. Both these decisions had huge implications for the outcome; although whether Ruth Kelly understood these implications is only something she could say.

With PFI, the process depends on the financial deals that can be arranged. Bombardier claim they are competitive but they are losing out on Siemens' ability to raise finance cheaper than Bombardier can. There 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 has said as much, tacitly admitting her Labour colleague's responsibility.

Our second point is this: The Commons Transport Select Committee has recommended that the National Audit Office should look into the EU competition laws. They should be investigate why the tender was put out using the 'Utilities Contract Regulations' rather than the 'Public Contracts Regulations'. It matters because Siemens has been fined for corruption. Under the 'Public Contracts Regulations' they could have been excluded from the bidding. So, two key decisions put Siemens where they are now. The choice of Regulations took Siemens from the side-lines to the starting grid, the choice of a PFI contract rather than a normal contract took them to pole position. The then Labour Transport Secretary Ruth Kelly and her civil servants have questions to answer and this is what we believe the NAO should investigate.

Over and above the local issue in the East Midlands is a wider issue. In August we tabled a series of questions in the House of Lords asking about the tender, asking if any attempt was made to determine the overall cost to the exchequer of each tender and what consideration given to employment, social security costs, tax revenues, balance of trade statistics; and which department is responsible for deciding which tender is most in the national interest."

The answers made it plain that no department was considering the 'high-level' view, the wider implications of the tender decision. One would have thought that this should be the Treasury's role so why are they not doing it? This story sheds a revealing, and not very reassuring, light in the way the UK government machinery works. This too the NAO should investigate.

The full version of this can be read at: http://www.aldes.org.uk/?p=449

Steve Coltman

Chair, Association of Liberal Democrat Engineers and Scientists.