Thameslink contract reinforces the lack of competition in the rolling stock market

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date: 12 September 2011

embargo: 00.01hrs Tuesday 13 September 2011

The Thameslink contract will exacerbate the anti-competitive nature of the rolling stock leasing market, says the TUC today (Tuesday) as the issue has been selected by the Labour Party front bench for debate to coincide with Congress motions on the future of rail manufacturing moved by ASLEF, Unite, RMT and TSSA.

The TUC believes that the Thameslink contract consolidates ownership in the highly concentrated and anti-competitive rolling stock leasing market, and that the government and rail regulators are failing to act to keep the market open.

The TUC had called for the decision not to award the Thameslink contract to Bombardier be referred to the Office of Rail Regulation and the Competition Commission over concerns that the contract potentially takes away fair competition and leaves the market dominated by a couple of providers.

The winning Siemens consortium is part financed by 3i Infrastructure, the Jersey-based private equity firm that also part-owns Eversholt one of the three leasing companies (ROSCOs) which control 95 per cent of UK rolling stock.

TUC Deputy General Secretary Frances O'Grady cited a Competition Commission report from 2009 that raised concerns about competition in the rolling stock market, even before the Siemens contract was won. Responding to a market investigation by the Office of Rail Regulation, the Competition Commission report found that the concentration of ownership and significant barriers to new entrants contributed to a lack of competition in the rolling stock market.

The TUC also believes that the complexity of the contract and the leasing requirement within it could be seen to favour bidders with existing capital investment functions and higher credit ratings, such as Siemens.

However, in response the Secretary of State and the Office of Rail Regulation chose not to investigate the issue of concentrated ownership arising from the design and award of the contract.

TUC Deputy General Secretary Frances O' Grady said: 'Awarding the Thameslink contract to Siemens is not only terrible news for the thousands of workers at Bombardier, but it's bad value for money for the government who will be paying out benefits when they should be collecting taxes for workers leading our manufacturing revival.

'We have written to the Secretary of State and the Rail Regulator to raise serious concerns about the awarding of the Thameslink contract, as it consolidates more of the UK's rolling stock into the hands of one company. We are disappointed that the government has side-stepped this issue which has adverse effects on an already anti-competitive market.

'We also believe the way the Thameslink contract has been formulated favours a particularly financial model, which will impact on future contracts such as Crossrail.

'The government hasn't yet signed the final contract and still has time and legal power to re-examine the Thameslink bid.'

NOTES TO EDITORS:

- All TUC press releases can be found at www.tuc.org.uk

- Congress 2011 will be held at the TUC's Congress House in central London this year. The event runs over three days from Monday 12 to Wednesday 14 September. The deadline for free media accreditation has now passed. Media passes may still be processed but may to be subject to delay. ALL applications for media passes now cost £50. You can apply online by visiting www.tuc.org.uk/the_tuc/tuc-19831-f0.cfm Wi-fi will be available free of charge throughout Congress House during the conference.

Contacts:

Media enquiries:
Liz Chinchen T: 020 7467 1248 M: 07778 158175 E: media@tuc.org.uk
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk
Elly Gibson T: 020 7467 1337 M: 07900 910624 E: egibson@tuc.org.uk

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