GOVT CUTS PUBLIC SERVICES BUT SQUANDERS PUBLIC MONEY ON RAIL PFI

GOVERNMENT Ministers have sought to absolve themselves of blame for betraying the British train manufacturing industry by claiming it is all Labour’s fault. They say Labour was in Government when the tenders were drawn up, and Labour appointed the Hitachi-led consortium as the preferred bidder for the £7.5bn Inter City Express (IEP) contract, QED.

But they are being typically disingenuous. The IEP contract has resulted in Hitachi constructing its main European base here in the UK – in County Durham. British jobs will directly result from it, whereas the new trains for Thameslink will be designed and assembled by Siemens in Germany.

Furthermore, Labour had second thoughts on the IEP project and Lord Adonis commissioned Sir Andrew Foster to review the Intercity Express Programme. http://tinyurl.com/c4nv2wr Sir Andrew’s report was published just after the Tory-Lib Dem Coalition was formed in 2010, and raised serious questions about the IEP’s value for money.

But the then Secretary of State for Transport, Philip Hammond, still decided go ahead with the IEP project and it was signed-off by his successor, Justine Greening, despite the concerns about excessive costs.

So what about Thameslink? Just like the IEP contract, the Thameslink programme contains flaws in the process, which I have highlighted to Transport ministers, the Chancellor and the Prime Minister. Moreover, expert advice given to the Transport Select Committee demonstrated that the formula created and used by the Dept for Transport, to select the preferred bidder, gave Siemens an unfair commercial advantage over Derby’s Bombardier. Recent analysis shows that an excessive financial burden will be incurred if it goes ahead in its present form. But all this evidence has been disregarded by the present Government.

Thameslink, like the Hitachi contract, is being taken forward as a Private Finance Initiative (PFI), but ministers are making an even bigger error than they made on the IEP contract. Not only are they ignoring Sir Andrew’s VFM criticisms, they have not secured any British jobs either, other than the ones that would have been created whoever won the contract.

Before the General Election George Osborne said he would replace PFI with a more cost effective system. In a Written Ministerial Statement (WMS) in November 2011 he said he would ensure: “... investment is cost effective, and that the taxpayer is getting maximum value for money”. This was to be delivered through “an accelerated and cheaper procurement process”. http://tinyurl.com/7rvpwqu

Then in the Autumn Statement, earlier this month, the Chancellor announced the publication of the Government’s proposed replacement for PFI. The document entitled: ‘A new approach to public private partnerships’ http://tinyurl.com/b2zq33u claimed the so-called PF2 would secure “improved value for money for the public sector and the taxpayer”.

But it seems Justine Greening didn’t read the Chancellor’s Written Ministerial Statement and Mr Osborne must have omitted to tell her what he was planning to announce in his Autumn Statement.

Had she looked at the railway press she would have seen evidence that the IEP contract costs will be almost double what they would be were it not a PFI scheme. Applying the same analysis to the Thameslink contract suggests the annual expenditure will also be hundreds of millions of pounds more than necessary.

To make such a crass decision would be unforgiveable when the Government’s austerity measures are imposing unprecedented cuts to cherished public services and diminishing most people’s living standards. But the current Transport Secretary, Patrick Mcloughlin, himself a Derbyshire MP, with constituents who work at Bombardier, seems to be steeling himself to do just that. Yet he is under no obligation to do so because the much criticised tender documentation http://tinyurl.com/4yoys6j gives the Secretary of State the power to stop the process at any time.