Sorry to be crude but I just read a press statement from Mary Creagh, Labour’s shadow transport secretary, about the announcement on Thursday that Bombardier (a Canadian firm) has won the contest to build trains for London’s forthcoming Crossrail line. Her statement isn’t the only piece of nonsense being talked by politicians about this contract, but it is the most shockingly dishonest. She said (I quote from the Labour Party website):
“Following the Thameslink train fiasco which led to a £1.6bn contract leaving the UK and putting thousands of jobs at risk, Labour called on the Government to award future contracts to companies who would build trains in the UK.”
Creagh refers to the contract to build trains for the Thameslink line which was awarded to Siemens, which will build the trains in Germany. Her statement is rubbish on several points.
1) The government has no power to “award contracts to companies who would build trains in the UK”. It is against EU procurement rules, which are transposed into UK law. To do so would be unlawful and would simply cause the other bidders who didn’t have train factories in the UK to take the government to court and win, while costing the taxpayer time and money. If Creagh doesn’t know this, she has no right to be shadow transport secretary, and if she does, she’s being deliberately misleading. By the same token, Bombardier can now hold its head high and say it won Crossrail in a fair fight.
2) The Thameslink contract to which Creagh refers was dreamt up by the previous, Labour, government. The main, though not the only, reason it was awarded to the Siemens consortium was that Siemens offered a lower net present value cost for designing, building and commissioning the trains; the contract could have specified slightly broader criteria but it didn’t. Siemens were somewhat helped in this by having a stronger credit rating than Bombardier. The credit rating is relevant because the Thameslink deal was privately financed and, although Siemens is not borrowing the money directly, it is offering certain guarantees to the project (offering to absorb cost overruns in certain events) which do depend on its creditworthiness. The decision to make this a privately financed deal, and to focus on the lowest net present value price for the trains, was Labour’s.
On that last point, take a look at this exchange between then transport secretary, Conservative Philip Hammond, and Labour’s Tom Harris in September 2011, as they chewed over the Thameslink deal (from Hansard):
Q96 Mr Harris: That is an extremely interesting commitment, Secretary of State. Does that mean that, if you had access to a time machine, you would go back and look again at the very start of this contract and perhaps do what 70% of the contracts from EU Governments do and take into account those locally economic advantages for this particular contract, hypothetically?
Mr Hammond: I do not have access to a time machine so I am going to focus on how we deal with future contracts. However, fortuitously, you were the Rail Minister-
Mr Harris: I know.
Mr Hammond: -at the time of this ITT [invitation to tender – when the government invited companies to send in bids to build the Thameslink trains] issue so perhaps you might like to answer your own question.
Burrrn, as Philip Hammond didn’t then say.
3) Bombardier jobs aren’t as linked to Thameslink as this suggests. When Bombardier didn’t win Thameslink, it made noises about losing 1,400 jobs (not quite “thousands”). Then it turned out that it had intended to cut 1200 jobs anyway, that there would have been a three-year wait for the order to be placed during which jobs would have been lost, and that Bombardier wasn’t going to shut its plant because of the failure to win the bid. Now that Bombardier’s won Crossrail rolling stock, the government says it “supports” 760 jobs, but neither they nor Bombardier say it guarantees any. By the way, most Bombardier workers at its Derby plant are temporary and can be fired at will.
P.S. The Thameslink rolling stock contract has an investment cost of £1.77 billion, not £1.6 billion. Pedantic I know but I’m fed up of people believing everything they read in press releases, and £170 million is quite a lot of money outside the world of infrastructure.
P.P.S. I wrote on Thameslink for The Guardian website – here.