Class 334 Lease Extension

[Snow1964]

The lease on 40 class 334 has been extended from 31 December 2030 for extra 4 years to 31 December 2034, with optional 12 months

£94,900,000 plus VAT

which works out at £593,125 per unit per year or £2,372,500 for 4 years per unit, which doesn't seem that cheap for a 30+ year old train, but appears Scotrail have allowed themselves to be backed into a corner with no alternative stock ready in time.

The lease rate is equivalent to £7.9m per vehicle over 40 years (£23.7m per unit). Which I would guess is about 2.5 to 3 times cost of a new train.

Description​

This notice concerns a modification to an existing lease (the Lease) procured whilst ScotRail was under the Abellio franchise ownership, between ScotRail Trains Limited (SRT) and Eversholt Rail Leasing Limited (Beacon Rail) for 40 x 3 car Class 334 vehicles (the Fleet). The Lease is currently scheduled to expire on 31 December 2030. The parties have agreed to revise the scheduled expiry date to extend the Lease to 31 December 2034, for the same scope of supplies, with an option to extend for up to a further 12 months beyond this revised date. The value of that extension (inclusive of options) is estimated to be GBP 94,900,000 excluding VAT. This extension is necessary to ensure SRT is able to discharge its obligations and continue to deliver vital services while the suburban new fleet procurement is concluded and is therefore an interim solution until the new fleet can be procured, built and commissioned for passenger service.

Total Quantity or Scope​

The Lease is being modified in accordance with regulation 86(1)(b) of the Utilities Contracts (Scotland) Regulations 2016 as additional supplies not included within the original procurement have become necessary, and a change of contractor cannot be made for economic or technical reasons and would cause significant inconvenience or substantial duplication of cost for SRT, because: 1. The modification has become necessary: there is a need to secure the ongoing operation of the Lease, which includes lifeline services in Glasgow suburban areas, while SRT carries out a full procurement for an enduring rolling stock solution. 2. A change of contractor cannot be made for economic or technical reasons: this is because: a. the Fleet has specific characteristics and technical features that are designed to interoperate with the rail infrastructure and SRT’s other fleets and are required for operation on the Glasgow Suburban Lines. For example: (i) Along with ScotRail’s other existing fleets, the Fleet is the only fleet which is fully accepted for operation on these lines, without incurring expensive and operationally disruptive gauging works. (ii) Driver Only Operation (DOO) bodyside cameras are a requirement for the Bathgate to Edinburgh portion of the route, currently operated by the class 334 fleet. (iii) Any alternative Fleet would require an extensive programme of train crew and engineering staff training, incurring significant training which would create significant additional (and disproportionate) training workload at a time when SRT is already engaged in an intensive programme of recruitment for future fleet cascades and new trains and therefore does not have the capacity to commence a training programme for an additional new fleet within the necessary timeframe. (iv) Please note there is a Section 54 Agreement currently in place. An extension to the Section 54 agreement is being finalised in relation to the Fleet, and SRT expects that agreement to be in place for the full duration of the lease and options. b. SRT’s analysis has confirmed that there are no alternative available fleets that contain the necessary technical features and could meet these requirements. Other potential available fleets have insufficient trains or would be too long to replace the existing 3-car Cl334 and do not have the network/depot/safety compatibility required to operate on the relevant routes. c. In the event that an alternative existing fleet with suitable performance and technical characteristics was available (which in SRT’s view is not the case), and that fleet could be adapted to accommodate the necessary technical features, this would result in substantial duplication of cost, significant inconvenience and extra time out of service, which would be disproportionate in the context of an interim solution.

Award Detail​

1	Eversholt Rail (London) Reference: sr-pact-proj-0307 Value: £94,900,000

Renewal Options​

Option to extend for a period of up to a further 12 months.

https://bidstats.uk/tenders/2026/W42/880410972#notice-descrip

 

[brad465]

2034 would make them 33 years old, which doesn't seem too extreme (unlike say 313s and 455s that reached their mid-40s), unless they've had pretty bad reliability issues (which wouldn't surprise me given they're related to the 458s that have had a catalogue of problems in their life).

 

[SC318250]

I think the issue with the Class 334 is the corrosion

With only 8 units going for welding, and taking over 6 months per unit, it might well be cheaper replacing them

I wouldnt be surprised if it the Class 318/320 would be a cheaper option to keep on and bin the 334 pending delivery of new units.

 

[Carntyne]

A staggering amount of money. Surely cheaper to just buy the fleet.

 

[43096]

A staggering amount of money. Surely cheaper to just buy the fleet.

That rather depends if the owner is prepared to sell.

 

[AilsaBus]

It's absolutley ridiculous that taxpayers money is being thrown down the pan for old rolling stock that has probably at least paid for itself once or twice over. I dread to think how much ScotRail is paying to lease the likes of the HSTs and 318s.

 

[Class83]

I'd expect them to need this extension in full and maybe a bit more, given ScotRail stock in order of age is 318s, 156/153s, 320/158s, then 334/170s.

The new stock isn't starting to arrive for 5 years so 334 will be some way down the list to replace.

 

[Snow1964]

I'd expect them to need this extension in full and maybe a bit more, given ScotRail stock in order of age is 318s, 156/153s, 320/158s, then 334/170s.

The new stock isn't starting to arrive for 5 years so 334 will be some way down the list to replace.

But it seems to me to be a weird (as in expensive) financial choice by Scotrail

Couple of years ago they knew had lease expiring 31 December 2030, and that shortish lease extensions tend to be hugely expensive (especially when leaseCo knows Operator has no alternative but to pay a high rate).

So why if they knew 334s weren't available after 31 December 2030 (except at high risk, high price extension) did they choose to delay awarding replacement contract until 2027, rather than getting on with ordering couple of years ago for replacements with entry into service date of late 2030

 

[scotraildriver]

HSTs are also in the region of £500k each per annum. Utterly ridiculous given these were bought and paid for by BR in the early 80s. The tender for replacement stock was hoped to be issued back in 2022 but the government have dragged their heels for 4 years until they eventually authorised it. Scotrail knew the position full well but alas are at the mercy of the government. Going forward there is still no plan for the 156/158 fleet for routes where battery electric isn't an option, such as the West Highland, so who knows what will happen there.

 

[Snow1964]

HSTs are also in the region of £500k each per annum. Utterly ridiculous given these were bought and paid for by BR in the early 80s. The tender for replacement stock was hoped to be issued back in 2022 but the government have dragged their heels for 4 years until they eventually authorised it. Scotrail knew the position full well but alas are at the mercy of the government. Going forward there is still no plan for the 156/158 fleet for routes where battery electric isn't an option, such as the West Highland, so who knows what will happen there.

If the planned replacement got delayed 4 years, then sounds like whoever did the business plan in 2022, clearly didn't explain the costs of not ordering very well, so 4 year delay was seen as economically viable.

Even the Treasury aren't likely to be that stupid if they are clearly told that alternative of a lease extension would be double or triple the cost of replacement trains per year.

 

[CDM]

whoever did the business plan in 2022, clearly didn't explain the costs of not ordering very well

No reason to assume that. It might well have been clearly set out, but other constraints or priorities meant that was seems like a sub-optimal decision, was still made at the time.

Even the Treasury aren't likely to be that stupid if they are clearly told that alternative of a lease extension would be double or triple the cost of replacement trains per year.

Not necessarily. It's not comparing apples/apples in finance terms. One requires CAPEX investment (which might be privately financed of course but that still counts differently, would initially run concurrent with the existing fleet OPEX and would require signing up to a long term investment...) while one is simply only ongoing OPEX and is a simple short-term decision. It's entirely possible for Treasury to make a decision on one hand, that impacts apparently adversely on another, based on what is driving them most at the time...