Latest news with #Roscos
Telegraph
15-04-2025
- Business
- Telegraph
Labour ‘must explain rail nationalisation blunder that cost taxpayers £250m'
The Government must explain a rail nationalisation blunder that is costing taxpayers £250 million, MPs have demanded. A group of 24 Liberal Democrat MPs has written to Heidi Alexander, the Transport Secretary, asking for an explanation on the deal with South Western Railway (SWR). Last week, The Telegraph revealed that civil servants had negotiated a £250 million increase in costs for leasing SWR's train carriages. It raises fears that passengers will have to pay increased fares to cover those extra fees. Rolling stock rental negotiations normally take between 18 months and two and a half years, according to both Government and industry sources. Yet talks on the SWR deal only began in December – just six months before the Government takes it over on May 25 – and are still ongoing, The Telegraph understands. Insiders said the cost of leasing the carriages under the new Government-controlled operation is set to soar by £50 million a year, increasing the company's train rental bill by a third. The Lib Dem MPs, most of whose constituencies are served by SWR, are demanding answers from Ms Alexander – and assurances that similar blunders will not happen with the other nine train companies the Government intends to nationalise over the coming three years. The Transport Secretary is being urged to explain exactly when the Department for Transport (DfT) realised it had to negotiate new contracts for SWR's rolling stock, as well as confirmation of how much the new leasing deal is costing the taxpayer. 'The Government has frequently justified nationalisation on the grounds it will deliver better value for money for British taxpayers. We are consequently concerned by recent media reports indicating missteps in the run-up to SWR's nationalisation which have negatively impacted the public purse,' said the letter, signed by Sir Ed Davey, the Lib Dem leader, and Paul Kohler, the party's transport spokesman. 'Assurances were given to the House on March 27 that the department was 'across the detail' and the issues delaying the rollout would be resolved by the time of nationalisation on May 25,' the letter pointed out. MPs have asked how the DfT 'will avoid any increase in leasing costs being borne by passengers in the form of increased fares or decreased investment'. Taxpayers are already propping up SWR, with the operator receiving net subsidies of £154.7 million during the 2024 financial year, according to Office of Rail and Road figures. The letter also asks 'whether negotiations with Roscos (the companies that lease train carriages to operators) have begun' in respect of the next train companies to be nationalised – c2c and Greater Anglia – 'or any other operators'. Roscos are typically owned by pension funds and similar investment businesses. They have the cash to pay for new trains up front, recovering those multi-million pound investments by charging leasing fees to train operators. The creation of Roscos was one of the key parts of John Major's rail privatisation of the 1990s, with the idea being that the companies would fund a wave of new investment to replace tired old British Rail trains. Labour's nationalisation plans do not include taking these businesses into state ownership, as it would cost billions to buy out the tens of thousands of carriages that they own. Hire of rolling stock SWR spent £92.5 million on the 'hire of rolling stock' in the 12 months to March last year, down from £104 million in the previous year, according to accounts filed at Companies House. It operates a mixed fleet of more than 2,000 carriages, comprising everything from ex-British Rail diesel trains to a new £1 billion fleet of air-conditioned, electrically powered units. c2c, whose trains run between London, Southend and Shoeburyness in south Essex, will be nationalised in July, while Greater Anglia, serving the rest of eastern England, falls under Government ownership in autumn this year. Both are similarly dependent on Rosco contracts for their trains. An official said: 'This Government is taking the railways back into public ownership at the lowest reasonable cost to the taxpayer, so we can get on with making the long-overdue improvements needed to make day-to-day journeys easier. 'The only alternative available to this Government would have been to buy the current operator out of the contract, a few months before it lapsed anyway – but this would have incurred the same rolling stock renewal costs next month, in addition to millions of pounds worth of compensation paid to the outgoing operator.'
Yahoo
15-04-2025
- Business
- Yahoo
Labour ‘must explain rail nationalisation blunder that cost taxpayers £250m'
The Government must explain a rail nationalisation blunder that is costing taxpayers £250 million, MPs have demanded. A group of 24 Liberal Democrat MPs has written to Heidi Alexander, the Transport Secretary, asking for an explanation on the deal with South Western Railway (SWR). Last week, The Telegraph revealed that civil servants had negotiated a £250 million increase in costs for leasing SWR's train carriages. It raises fears that passengers will have to pay increased fares to cover those extra fees. Rolling stock rental negotiations normally take between 18 months and two and a half years, according to both Government and industry sources. Yet talks on the SWR deal only began in December – just six months before the Government takes it over on May 25 – and are still ongoing, The Telegraph understands. Insiders said the cost of leasing the carriages under the new Government-controlled operation is set to soar by £50 million a year, increasing the company's train rental bill by a third. The Lib Dem MPs, most of whose constituencies are served by SWR, are demanding answers from Ms Alexander - and assurances that similar blunders will not happen with the other nine train companies the Government intends to nationalise over the coming three years. The Transport Secretary is being urged to explain exactly when the Department for Transport (DfT) realised it had to negotiate new contracts for SWR's rolling stock, as well as confirmation of how much the new leasing deal is costing the taxpayer. 'The Government has frequently justified nationalisation on the grounds it will deliver better value for money for British taxpayers. We are consequently concerned by recent media reports indicating missteps in the run-up to SWR's nationalisation which have negatively impacted the public purse,' said the letter, signed by Sir Ed Davey, the Lib Dem leader, and Paul Kohler, the party's transport spokesman. 'Assurances were given to the House on the March 27 that the Department was 'across the detail' and the issues delaying the rollout would be resolved by the time of nationalisation on May 25,' the letter pointed out. MPs have asked how the DfT 'will avoid any increase in leasing costs being borne by passengers in the form of increased fares or decreased investment'. Taxpayers are already propping up SWR, with the operator receiving net subsidies of £154.7 million during the 2024 financial year, according to Office of Rail and Road figures. The letter also asks 'whether negotiations with Roscos (the companies that lease train carriages to operators) have begun' in respect of the next train companies to be nationalised – c2c and Greater Anglia – 'or any other operators'. Roscos are typically owned by pension funds and similar investment businesses. They have the cash to pay for new trains up front, recovering those multi-million pound investments by charging leasing fees to train operators. The creation of Roscos was one of the key parts of John Major's rail privatisation of the 1990s, with the idea being that the companies would fund a wave of new investment to replace tired old British Rail trains. Labour's nationalisation plans do not include taking these businesses into state ownership, as it would cost billions to buy out the tens of thousands of carriages that they own. SWR spent £92.5 million on the 'hire of rolling stock' in the 12 months to March last year, down from £104 million in the previous year, according to accounts filed at Companies House. It operates a mixed fleet of more than 2,000 carriages, comprising everything from ex-British Rail diesel trains to a new £1 billion fleet of air-conditioned, electrically powered units. c2c, whose trains run between London, Southend and Shoeburyness in south Essex, will be nationalised in July, while Greater Anglia, serving the rest of eastern England, falls under Government ownership in autumn this year. Both are similarly dependent on Rosco contracts for their trains. An official said: 'This Government is taking the railways back into public ownership at the lowest reasonable cost to the taxpayer, so we can get on with making the long-overdue improvements needed to make day-to-day journeys easier. 'The only alternative available to this Government would have been to buy the current operator out of the contract, a few months before it lapsed anyway – but this would have incurred the same rolling stock renewal costs next month, in addition to millions of pounds worth of compensation paid to the outgoing operator.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
08-04-2025
- Business
- Telegraph
Labour blunder will cost taxpayers £250m extra to nationalise rail firm
Labour's nationalisation of a major train company will cost taxpayers an extra £250 million after a blunder by civil servants, The Telegraph can reveal. South Western Railway (SWR), which serves London and a large swathe of southern England, will be operated by the Government from May 25. However, a negotiating error by the Department for Transport (DfT) means taxpayers must spend an extra £50 million a year to lease SWR trains after that date. Passengers could be told to pay higher ticket prices to offset some of the increased cost, even though public subsidy for the railways stood at £12.5 billion last year. At the centre of the blunder is the fact that, as is the case with almost all government-franchised operators, SWR does not own its trains. All its rolling stock is leased from companies known as Roscos. Operators preparing to take over a rail franchise typically start negotiating with Roscos over prices for trains about 18 months in advance of their start date, said industry sources. Even though DfT itself set SWR's franchise end date as May 25 and published this on its government website, civil servants did not start negotiating with SWR's Roscos until Heidi Alexander, the Transport Secretary, announced in December that the operation would be nationalised. This decision to leave talks to the last-minute meant that DfT gave itself just a third of the normal time needed to put together a deal. The result of DfT's short-notice negotiation, together with civil servants' insistence that the lease could only last for five years, was an extra £50 million a year on the price of the trains, totalling £250 million. 'One-sided offer' Angel Trains, Porterbrook and Rock Rail – the Roscos supplying SWR – each raised their prices by between 10 and 20 per cent as a result of the increased risk from an unusually short contract, insiders said. 'There's sod all, basically, that the Government can do about that because it's now far too late to do anything different,' one added. The one-sided offer came about because DfT had forgotten that it could not simply roll over SWR's existing contracts, an insider claimed – although a Government source insisted that civil servants could not start negotiating until the rail nationalisation bill received Royal Assent in December. Previously, DfT has taken over failing private rail operators such as Northern and LNER. All of those takeovers occurred in the middle of the franchise, meaning existing deals stayed in place. Britain is already tightening its belt because of Donald Trump's trade tariffs, which threaten the spending plans of Rachel Reeves, the Chancellor, and could potentially trigger further tax rises. Amid the global economic uncertainty, the Tories warned that the taxpayer could not afford Labour's flagship rail nationalisation plans, with another nine train companies set to follow SWR into state ownership over the next three years. Jerome Mayhew, the Conservative shadow transport minister, said: 'Labour's pandering to the rail unions' demand for full nationalisation is already costing the taxpayer dear. 'The Government was warned that their plans were wrong-headed but they refused to listen to anyone but their union funders.' Labour promised in its general election manifesto that it could nationalise train companies 'without costing taxpayers a penny in compensation'. Competition investigation In March the Office of Rail and Road said it was reopening a 2020 investigation into choice and competition in the rolling stock market, over fears that Roscos were charging too much and failing to compete properly against each other. Rock Rail, which owns the controversial £1 billion Arterio train fleet, whose entry into SWR service has been delayed partly because of trade union objections to the size of its windscreen wiper, did not respond to a request for comment. Angel Trains, owner of the 750-carriage Siemens Desiro fleet operated by SWR, declined to comment and said its negotiations with DfT were commercially confidential. Porterbrook, which owns a minority of SWR's trains, declined to comment for the same reason. A government source said: 'This Government is taking the railways back into public ownership at the lowest reasonable cost to the taxpayer, so we can get on with making the long-overdue improvements needed to make day-to-day journeys easier. 'Negotiations like these take two and a half years on average, and so should have been started by the previous Conservative government in 2023, whether the railways were being taken into public ownership or not. 'This is the long tail of Tory incompetence, which continues to fail passengers, even when they are not in power. They added: 'The only alternative available to this Government would have been to buy the current operator out of the contract, a few months before it lapsed anyway – but this would have incurred the same rolling stock renewal costs next month, in addition to millions of pounds worth of compensation paid to the outgoing operator.'
Yahoo
08-04-2025
- Business
- Yahoo
Labour blunder will cost taxpayers £250m extra to nationalise rail firm
Labour's nationalisation of a major train company will cost taxpayers an extra £250 million after a blunder by civil servants, The Telegraph can reveal. South Western Railway (SWR), which serves London and a large swathe of southern England, will be operated by the Government from May 25. However, a negotiating error by the Department for Transport (DfT) means taxpayers must spend an extra £50 million a year to lease SWR trains after that date. Passengers could be told to pay higher ticket prices to offset some of the increased cost, even though public subsidy for the railways stood at £12.5 billion last year. At the centre of the blunder is the fact that, as is the case with almost all government-franchised operators, SWR does not own its trains. All its rolling stock is leased from companies known as Roscos. Operators preparing to take over a rail franchise typically start negotiating with Roscos over prices for trains about 18 months in advance of their start date, said industry sources. Even though DfT itself set SWR's franchise end date as May 25 and published this on its government website, civil servants did not start negotiating with SWR's Roscos until Heidi Alexander, the Transport Secretary, announced in December that the operation would be nationalised. This decision to leave talks to the last-minute meant that DfT gave itself just a third of the normal time needed to put together a deal. The result of DfT's short-notice negotiation, together with civil servants' insistence that the lease could only last for five years, was an extra £50 million a year on the price of the trains, totalling £250 million. Angel Trains, Porterbrook and Rock Rail – the Roscos supplying SWR – each raised their prices by between 10 and 20 per cent as a result of the increased risk from an unusually short contract, insiders said. 'There's sod all, basically, that the Government can do about that because it's now far too late to do anything different,' one added. The one-sided offer came about because DfT had forgotten that it could not simply roll over SWR's existing contracts, an insider claimed – although a Government source insisted that civil servants could not start negotiating until the rail nationalisation bill received Royal Assent in December. Previously, DfT has taken over failing private rail operators such as Northern and LNER. All of those takeovers occurred in the middle of the franchise, meaning existing deals stayed in place. Britain is already tightening its belt because of Donald Trump's trade tariffs, which threaten the spending plans of Rachel Reeves, the Chancellor, and could potentially trigger further tax rises. Amid the global economic uncertainty, the Tories warned that the taxpayer could not afford Labour's flagship rail nationalisation plans, with another nine train companies set to follow SWR into state ownership over the next three years. Jerome Mayhew, the Conservative shadow transport minister, said: 'Labour's pandering to the rail unions' demand for full nationalisation is already costing the taxpayer dear. 'The Government was warned that their plans were wrong-headed but they refused to listen to anyone but their union funders.' Labour promised in its general election manifesto that it could nationalise train companies 'without costing taxpayers a penny in compensation'. In March the Office of Rail and Road said it was reopening a 2020 investigation into choice and competition in the rolling stock market, over fears that Roscos were charging too much and failing to compete properly against each other. Rock Rail, which owns the controversial £1 billion Arterio train fleet, whose entry into SWR service has been delayed partly because of trade union objections to the size of its windscreen wiper, did not respond to a request for comment. Angel Trains, owner of the 750-carriage Siemens Desiro fleet operated by SWR, declined to comment and said its negotiations with DfT were commercially confidential. Porterbrook, which owns a minority of SWR's trains, declined to comment for the same reason. A government source said: 'This Government is taking the railways back into public ownership at the lowest reasonable cost to the taxpayer, so we can get on with making the long-overdue improvements needed to make day-to-day journeys easier. 'Negotiations like these take two and a half years on average, and so should have been started by the previous Conservative government in 2023, whether the railways were being taken into public ownership or not. 'This is the long tail of Tory incompetence, which continues to fail passengers, even when they are not in power. They added: 'The only alternative available to this Government would have been to buy the current operator out of the contract, a few months before it lapsed anyway – but this would have incurred the same rolling stock renewal costs next month, in addition to millions of pounds worth of compensation paid to the outgoing operator.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
