Rail jobs, staff issues and training

03.05.19

Stagecoach says it was disqualified because it rejected £1.6bn rail pensions risk

Stagecoach has said it was disqualified from three rail franchise competitions because it refused to accept a pensions risk “well in excess of £1bn.”

The transport group has said projections offered by the DfT were “inadequate,” and in one scenario the company estimated it could have been left with pension liabilities of £1.6bn, including nearly £700m on the West Coast franchise alone.

In a statement to the stock market, Stagecoach listed the risks it said the DfT wanted train operators to take in new franchises, which included making up employees’ contributions if they refused to pay at an increased level.

It said that accepting the DfT’s position on pensions would “have been to take on unknowable risk and been contrary to the success of the company and also contrary to the interests of employees, customers and the franchise.”

This echoes Richard Branson who said “we can’t accept a risk we can’t manage – this would be reckless” as he warned that Virgin Trains, which was part of a joint franchise bid with Stagecoach, could disappear by the end of the year.

Last month, Stagecoach’s bids for the East Midlands, South Eastern and West Coast franchises were judged to be “non-compliant” as they breach pension rules, leading to a row over railway pensions.

The DfT said Stagecoach was “responsible for their own disqualification” and had “repeatedly ignored established rules,” but the Pensions Regulator warned that train operators face a pensions black hole of £7.5bn, and the RMT has threatened strike action over the deficit.

Stagecoach has now said there was an “absence of any contractual protection” for the rail franchises, and “as yet there has been no final determination by the Railway Pensions Scheme or regulator of the extend of the liability that would be borne by franchises.”

“While ultimately the DfT provided limited protection against the risk in the specification for the three current franchise competitions, our assessment was it still left the successful operators with substantial risk which could not be assessed.”

The Pensions Regulator said: “We are working closely with the scheme trustees, Rail Delivery Group and the Department for Transport to ensure the best possible outcome for pension scheme members.

“Part of this work is to ensure the scheme is adequately funded so that members receive the benefits they expect.”

Image credit - Peter ByrnePA WirePA Images

Comments

There are no comments. Why not be the first?

Add your comment

 

related

rail technology magazine tv

more videos >

latest rail news

Ground-breaking rail collaboration launched to improve services for passengers

20/09/2019Ground-breaking rail collaboration launched to improve services for passengers

  A ground-breaking deal has been agreed today among rail bosses to deliver higher standards for rail users in the West Midlands.  ... more >
Network rail proposal for UNESCO World Heritage Site

20/09/2019Network rail proposal for UNESCO World Heritage Site

Network Rail has submitted a planning application to City of Edinburgh Council proposing to install a bridge walk and visitor centre at the histori... more >
Manchester Metrolink’s greener future

19/09/2019Manchester Metrolink’s greener future

Transport for Greater Manchester (TfGM) are to renew and upgrade Manchester Metrolink’s electrical infrastructure in a bid to support and m... more >

editor's comment

23/01/2018Out with the old...

Despite a few disappointing policy announcements, especially for the electrification aficionados amongst us, 2017 was, like Darren Caplan writes on page 20, a year generally marked by positive news for the rail industry. We polished off the iconic Ordsall Chord (p32), hit some solid milestones on Thameslink (p40), progressed on ambitious rolling stock orders (p16), and finally started moving forward on HS2 (p14) ‒ paving the way for a New Ye... read more >

last word

Encouraging youngsters to be safe on the railway

Encouraging youngsters to be safe on the railway

This summer, Arriva Group's CrossCountry and the Scout Association joined to launch a new partnership to promote rail safety among young people. Chris Leech MBE, business community manager at the... more > more last word articles >

'the sleeper's' daily blog

Connecting Network Rail with the supply chain

17/09/2019Connecting Network Rail with the supply chain

Continuing our mission to connect buyers with suppliers, This year TransCityRail North is adding a new element to the event. We are introducing an incomparable opportunity for you to meet with over 11 procurement directors from Network Rail at our exclusive 'Network Rail Meet the Buyers Hub'.  Situated at the heart of the event during the exhibition and breaks TransCityRail North attendees can visit the Network Rail Meet the B... more >
read more blog posts from 'the sleeper' >

comment

The challenge of completing Crossrail

05/07/2019The challenge of completing Crossrail

With a new plan now in place to deliver Crossrail, Hedley Ayres, National Audit Office manager, major projects and programmes, takes a look at ho... more >
Preparing the industry to deliver trains for the future

04/07/2019Preparing the industry to deliver trains for the future

The move to decarbonise the rail network involves shifting to cleaner modes of traction by 2050. David Clarke, technical director at the Railway ... more >
Sunshine future beckons for South Wales Railways, says 10:10 Climate Action’s Leo Murray

02/07/2019Sunshine future beckons for South Wales Railways, says 10:10 Climate Action’s Leo Murray

Smart electrification is the way to boost clean energy resources, argues Leo Murray, director at 10:10 Climate Action. Contractors are clear... more >
Ambition doesn’t have to be expensive, says Midland Connect's Maria Machancoses

02/07/2019Ambition doesn’t have to be expensive, says Midland Connect's Maria Machancoses

The TCR Midlands conference is only days away and tickets are going fast for the sector event of the year at the Vox Conference Centre in Birming... more >

rail industry focus

  • 11/09/2019The next generation of rail infrastructure

    How the rail industry delivers the next generation of complex infrastructure will rely heavily on the people tasked with leading the projects, and the...
  • 11/09/2019Putting passengers first

    How does the rail industry design the railways for the next 40 years, and when it does, how do we make sure it’s all done with the passenger in mind?...
  • 10/09/2019Cleaning up the railways

    Jim Knox, director of Gard Chemicals, explains how the company is helping the rail industry ensure they have the best cleaning and maintenance...
View all News

interviews

Andrew Haines, CE of Network Rail, tells BBC News his organisation could issue future rail franchises

24/06/2019Andrew Haines, CE of Network Rail, tells BBC News his organisation could issue future rail franchises

Andrew Haines, the Chief Executive of Network Rail, has told the Today programme on Radio 4's BBC’s flagship news programme that he wo... more >