Rail franchise row moves to High Court

Discussion in 'UK Railway Discussion' started by Jorge Da Silva, 18 Jan 2020.

  1. Jorge Da Silva

    Jorge Da Silva Established Member

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    https://www.thetimes.co.uk/article/rail-franchise-row-moves-to-high-court-dbr6mvwpb

    Can’t access full article
    Any thoughts
     
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  3. Aictos

    Aictos Established Member

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    I’m fed up of the trouble that the West Coast brings with lawsuits, First/Italian Railways won so get over it.

    The line needs stability and the various legal challenges are not giving this.
     
  4. LNW-GW Joint

    LNW-GW Joint Veteran Member

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    There's quite a lot at stake, but I shouldn't think First/Trenitalia's ICWC operation is at risk.
    The case is more about getting a ruling on pension liabilities of franchise holders, and clarity for future bids.
    It might mean damages and loss of face for DfT if they lose, but they do seem confident of their position.
    In any case, we are expecting a major change in the franchising process after the Williams review, so it may not mean much in the long run.
    The future of the HS2 side of the franchise will become clear (or not) soon.
     
  5. Robertj21a

    Robertj21a Established Member

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    It's nothing to do with 'get over it', it's to check on the legal situation.
     
  6. Bletchleyite

    Bletchleyite Veteran Member

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    I hope Virgin/Stagecoach are ruled to be correct, as the residual final salary pensions really need to sit with a Governmental organisation and no new ones to be instituted as per every other industry. They are essentially a pyramid scheme.
     
  7. Class 170101

    Class 170101 Established Member

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    I think if Stagecoach et al win then Pensions will be poorer for all or nearly all - with only the top top individuals getting really good retirements and the rest having to work until they drop.
     
  8. WatcherZero

    WatcherZero Established Member

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    So you think pensions will be worse if they are public rather than private?

    Its not the terms of the pensions that are at stake but whether the government can offload the liability for a multi decade funding shortfall in public pensions (that to a degree pre-dates privatisation) onto the temporary private custodians of the franchises.
    The Tocs are already having to put in £100m a year extra into the rail pension fund to top up this historic liability.
     
  9. Robertj21a

    Robertj21a Established Member

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    How do you explain that ?
     
  10. Failed Unit

    Failed Unit Established Member

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    I am no fan of Stagecoach / Virgin either. But will watch this with interest. I know they can’t reverse the awards of either West Coast or EMR. But if they win and either franchise runs into trouble this will get very messy very quickly. Especially on EMR where abellio have already got 3 franchises in deep trouble.

    Stagecoach / virgin could do very nicely out of the compensation. DfT will carry on no different and us taxpayers think when will someone hold dft to account.
     
  11. island

    island Established Member

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  12. Snow1964

    Snow1964 Member

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    It’s not just the West Coast, part of the South West Trains franchise was said to have been lost due to non compliant bid.

    I think of of the financial reporting organisations said that pension liabilities were part of it, and another was the inability to guarantee new stock would be on time, and another was infrastructure couldn’t handle the required capacity until upgraded (Can’t remember article exactly)

    Of course we all now know that SWR is trying to renegotiate, which is rather difficult for DfT as it rejected opposition for not being able to deliver, what SWR now can’t manage either, having over-promised and subsequently discovering it can’t deliver
     
  13. Class 170101

    Class 170101 Established Member

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    Do you really think the Treasury will top up the pension pot if they lose? The Government will either just pass a law meaning the pension schemes can pay out less on the basis the pot isn't covering its liabilities or will just let the pensions go to the wall to force the issue for staff to accept lower pensions on the basis its that or nothing at all.
     
  14. Failed Unit

    Failed Unit Established Member

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    That is my fear of the current situation. Bid what you like - win. Fail to deliver - Renegotiate.
     
  15. 43096

    43096 Established Member

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    I would think Stagecoach are watching SWR very closely. Not only is there this issue, but a precedent was set with VTEC. If SWR are bailed out, then what is so different from VTEC?
     
  16. 43096

    43096 Established Member

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    That appears to be First's business model. I think it's a pretty dishonest way of doing business - promise loads then fail to deliver, blame someone (anyone, depending how desperate you are) else, then try to negotiate your way out of it.
     
  17. scrapy

    scrapy Established Member

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    With the exception of ex-BR staff railway pensions effectively stopped being final salary pensions a few years ago.

    The deficit in ex-BR pensions should be met by the government as John Major promised to do at privatisation, then any new franchisee would only be liable for keeping their part of the pot topped up.
     
  18. Jorge Da Silva

    Jorge Da Silva Established Member

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    Full article
     
  19. Meerkat

    Meerkat Established Member

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    Fail to deliver - lose lots of money then renegotiate.
     
  20. thedbdiboy

    thedbdiboy Member

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    Have you been following the story? It wasn't 'bid what you like' that has landed DfT in court, it was the DfT attempting to push unquantifiable risks on to bidders and then disqualifying those that did not comply. Failure to deliver (as is happening with a number if franchises) results in a very expensive forfeit of the bond, and there is no renegotiation of existing contracts. The current system is dead. Don't expect future contracts (I refuse to call them franchises!) to be anything like the current ones, the mix of reward and risk has got hopelessly muddled.
     
  21. Starmill

    Starmill Veteran Member Associate Staff Events Co-ordinator

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    I know everyone likes having their 'hot take', but these ones all seem to based on the idea that a government contractor makes a profit out of winning the Department's tender, performing very poorly against the contract benchmark and then defaulting on the payments once the bond the winners were required to put up when they won is all spent.

    That's simply not true.

    As it stands, in a small way, Dutch and German taxpayers have been funding some British railway's operating losses. Profits on other lines, from other parts of the transport businesses they're invested in, and complex commercial structures can hide the true figures quite effectively, though. And that's before we come to owning groups making money by using rail franchises to award themselves business, although there's not a very great deal of scope for that.
     
  22. Failed Unit

    Failed Unit Established Member

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    Indirectly it has. The EMR franchise had 1 bidder because the other 2 wouldn’t submit a “compliant” bid. We will see how it works out but the winner has bid what they like.
     
  23. Aictos

    Aictos Established Member

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    That well be regarding the pensions but I have to ask is the DfT fit for purpose? Especially if we are seeing legal case after legal case in some form or other...
     
  24. Starmill

    Starmill Veteran Member Associate Staff Events Co-ordinator

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    This doesn't make any real sense at all.

    If you thought you were the only bidder who had met all of the pass/fail criteria, you would submit a relatively expensive (i.e. less competitive) bid.
     
  25. Failed Unit

    Failed Unit Established Member

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    Had they not submitted the bid before the other 2 were disqualified? But when you consider the parents group track record of franchises in trouble they would have probably won it anyway.
     
  26. matt_world2004

    matt_world2004 Established Member

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    Abellio and Arriva bid with the expectation to make a profit.the fact that they got their sums wrong is not the government's or the dfts fault unless the DFT mislead them or broke their contract with them. In which case they should sue.
     
  27. Starmill

    Starmill Veteran Member Associate Staff Events Co-ordinator

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    There has been nobody trying to claim that it is. There have also been no reported cases of contractors refusing to pay. Why does eveyone seem to think there are!?
     
  28. matt_world2004

    matt_world2004 Established Member

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    I said nothing about contractors refusing to pay
     
  29. Nicholas Lewis

    Nicholas Lewis Member

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    These are the four organisations taking the Dept of Transport the Technology & Construction Court next week

    Stagecoach East Midlands Trains Limited v Secretary of State for the Department of Transport

    Arriva Rail East Midlands Limited v The Secretary of State for Transport

    West Coast Trains Partnership Limited and others v Department for Transport

    Stagecoach South Eastern Trains Limited and others v Secretary of State for the Department of Transport
     
  30. fishtastic

    fishtastic Member

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    The thing that gets me about this is Virgin didn't want to be held liable for a pension pot shortfall in the next franchise, ok fair enough but since they had ran the franchise for the previous 20 years surely any shortfall was because they hadn't put in enough.
     
  31. py_megapixel

    py_megapixel Member

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    Is it actually true that Stagecoach "used to be Britain's biggest train operator?"
    The only franchises they had were EMT, SWT and Virgin, and Virgin CrossCountry didn't overlap with VTEC as far as I can remember.
     

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