27.02.15
McLoughlin overrules officials who called Pacer replacement ‘poor value’
Transport minister Patrick McLoughlin used a ministerial direction to release the Invitations to Tender (ITT) for the Northern and TPE franchises, despite civil service assessments of the business case suggesting it is “poor value for money”.
Philip Rutnam, permanent secretary at the Department for Transport, wrote in a letter to McLoughlin yesterday that the assessment of the business case “suggests it is poor value for money”.
He added: “In particular the analysis gives an estimated benefit to cost ratio (BCR) for the proposal of 0.35 if a 30-year view of the likely impact is taken.”
However, he warned that if the impact is assessed only over the life of the franchise the BCR is much poorer at, 0.12.
Rutnam noted that the “fundamental reason” for the poor BCR is that there will be large costs from bringing forward the replacement of the Pacers to 2020. He also noted that the plans to introduce a minimum of 120 new build vehicles, “significantly reduces flexibility for bidders”.
In response, McLoughlin said he was “formally directing” Rutnam to proceed with approving the release of the ITT for Northern and TPE.
McLoughlin noted the value for money concerns, but said: “I believe there are wider issues to consider which I accept fall outside the remit of the Accounting Officer but that I consider are material.
“In particular, the use of Pacers has a negative impact on the reputation of rail services in the Northern area. I don’t consider that the continued use of these uncomfortable and low quality vehicles is compatible with our vision for economic growth and prosperity in the north.”
Mick Whelan, general secretary of the ASLEF union, said it is “always worrying” when a secretary of state has used a ministerial direction.
“It means that a minister has ordered his permanent secretary to go ahead when the civil service, who clearly have serious doubts about the enterprise, believes it does not offer the taxpayer proper value for money,” he added.
“Of course we want to see the back of the Pacers, and the introduction of a modern fleet, but we have been calling for that for years. The devil, as always, is in the detail. And we know that these plans will mean higher fares for passengers and cuts to jobs for railway staff.”
There has been no reaction yet from either of the companies who were seeking non-new build options to potentially replace the Pacers: Vivarail and its refurbished London Underground D78 stock, or Porterbrook and its 'Class 144e' 'upgraded Pacer' concept, which cost £800,000 to develop.
(Image: c. Stefan Wermuth/PA Wire)
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