Diesel trains which form part of the 1,300 additional carriages pledged by the government are to be bought and leased to train operators by a new rolling stock leasing company set up by the Department for Transport.
The government-owned Diesel Trains Ltd will bypass the existing major ROSCOs - Angel Trains, HSBC Rail and Porterbrook. Ministers say the new company represents the quickest way of bringing new carriages into service and relieving overcrowding and has promised that it will eventually be sold to the private sector.
Crucially, the new firm will allow the DfT to remove decisions on train leasing charges from the ROSCOs, allowing it to sidestep complex price negotiations and speed up train orders, avoiding allegedly exorbitant rental fees which have been blamed for increasing the cost of running train services since privatisation of the rail network in the 1990s. Instead, an independent expert will be appointed to make decisions on charges following consultation with the rail industry.
Although the DfT says the new company will not compete with the existing ROSCOs, it is no secret that it has been unhappy with charges to train operators imposed by the three companies. Souring government relations with the leasing companies led the DfT to announce a market investigation into the costs of rail rolling stock leases in June 2006 but subsequent findings largely vindicated the ROSCOs. However, last month it emerged that the £7.5bn fleet of next-generation inter-city trains will be procured without the involvement of a traditional ROSCO.
While the government has written to industry partners assuring them it intends to sell the new company to the private sector, ROSCOs interested in bidding for the firm will have to meet a reserve price and the government will retain ownership should no bidders come forward. Any new owner will be obliged to honour the leasing charges for trains bought prior to the sale of the company.
Transport Minister Andrew Adonis said: "This is the most effective way to buy new trains quickly and for the benefit of passengers. This new company is an illustration of the government's commitment to reducing crowding for rail passengers. This is a milestone in the delivery of new carriages which will help to increase rail capacity on some of our busiest routes. I'm delighted we have reached such an important stage and that passengers will see the benefits within a relatively short period of time."
Diesel Trains Ltd will initially spend approximately £300m buying 202 diesel carriages to relieve overcrowding in the Thames Valley, around Bristol and on longer distances in northern England. An order is expected to be announced in April 2009 and the trains are set to enter service by 2012 subject to negotiations with train operators First Great Western, Trans-Pennine Express and Northern Rail.
This £300m spend forms part of the £1bn announced in the Chancellor's pre-budget review in November 2008 to accelerate delivery of major transport projects. In addition, the DfT is currently negotiating with other train operators for the purchase of 120 new carriages and over the next 12 months, would expect to see orders for a further 250 carriages. By the end of next year, orders for over 1,000 new carriages are likely to have been placed.
The DfT anticipates that the following contracts will be put into place so as to enable the train building to start as quickly as possible:
- 3 tripartite manufacturing and supply agreements between Diesel Trains Ltd, the manufacturer and each of the TOCs;
- 3 bipartite technical support and spares supply agreements between the spares supplier and each of the TOCs;
- 3 bipartite rolling stock leases between Diesel Trains Ltd and each of the TOCs; and
- 1 single overarching umbrella deed signed by Diesel Trains Ltd, the manufacturer, the spares supplier and the 3 TOCs.
The government's commitment to increasing capacity on the rail network from 2009 to 2014 was set out in the July 2007 Rail White Paper. It is likely to require 1,300 additional carriages. This was described in the DfT Rolling Stock Plan published in January 2008.
