National Audit office issues scathing report on Great Western electrification blaming the Department for Transport’s mismanagement

Published: 18th November 2016

Cost-overruns, delays and contract variations cost passengers and taxpayers £330million

Cost-overruns, delays and contract variations cost passengers and taxpayers £330million as electrification is cut short

The National Audit Office (NAO) has published a damming report on the Great Western (GW) railway electrification and says that the cost has risen by £2.1billion in three years to around £5.58 billion. The scheme has also been delayed between 18 months and three years from original timescales.

The report says that the Department for Transport (DfT) and Network Rail (NR) have begun to improve the programme management but have more to do to protect value for money in the future.

Cost-overruns, delays and contract variations cost passengers and taxpayers £330million

Cost-overruns, delays and contract variations cost passengers and taxpayers £330million as electrification is cut short

The National Audit Office (NAO) has published a damming report on the Great Western (GW) railway electrification and says that the cost has risen by £2.1billion in three years to around £5.58 billion. The scheme has also been delayed between 18 months and three years from original timescales.

The report says that the Department for Transport (DfT) and Network Rail (NR) have begun to improve the programme management but have more to do to protect value for money in the future.

They said:

Amyas Morse, head of the National Audit Office said; “The modernisation of the route has potential to deliver significant benefits for passengers but this is a case study in how not to manage a major programme.

The Department's failure to plan and manage all the projects which now make up the Great Western Route Modernisation industry programme in a sufficiently joined up way, combined with weaknesses in Network Rail's management of the infrastructure programme, has led to additional costs for the taxpayer.

The delays will cost the DfT an estimated £330 million. These cost increases and recent changes to the new trains order mean that the value for money of the programme needs to be reassessed, and the extent of electrification reconsidered, according to a report today by the National Audit Office. The extra cost is because the Hitachi trains will now all be what is known as bi-ode, which means will have a diesel and electric traction package.

Originally only some of them were procured as such but the delays meat that the DfT who negotiated the contracts, would have paid up to £400,000 a week in lease and storage charges while they were laid up in sidings because electrification has not been completed.

The Great Western route has some of the most overcrowded services in England and Wales and has forecast passenger growth of 81% between 2013-14 and 2018-19. The modernisation programme involves complex infrastructure works, new trains and service changes.

No joined up planning by the DfT

The NAO report says that prior to last year, the DfT did not plan and manage all the GW electrification/modernisation projects in a sufficiently joined up way. The DfT did not produce a business case combining all elements of the programme until March 2015. This was over two years after ordering the trains and over a year after NR commenced electrification works.

The DfT negotiated and signed a contract with Hitachi to buy the new trains thus creating a fixed deadline for completion of infrastructure works including electrification. This was demonstrated by the fact that NR had only just identified that it would need to develop a new type of electrification equipment and deadlines were not based on any understanding of what was involved.

Combined with the unrealistic NR cost estimates in 2014 they also over-estimated the effects of using new technology but underestimated how many bridges it would need to rebuild or modify as well as timescales to obtain planning permission and other consents.

These failings in NR’s approach to planning and delivering the infrastructure programme further increased costs and critically did link key parts of the project together.

These delays will cost the DfT up to £330 million as they will have to negotiate a contract variation for the Intercity Express trains so that they can operate under both diesel and electric power.

In addition, they will receive less income from the Great Western franchise until March 2019 as the operator will have increased costs of providing extra trains and leasing depots, as well as higher running costs from operating diesel trains for longer, while also receiving less revenue from passengers than expected.

Train delays elsewhere

The knock-on effects are that other crowded routes will not now be receiving cascaded trains no longer required on the GW routes for a few years putting pressure on the DfT rail franchising programme.

Network Rail now has to deliver as much as possible to get electric services running with the funding it has. The DfT has therefore delayed some electrification in some areas until 2024.

As a result of this, Rail Minister Paul Maynard announced that he had decided to defer four parts of the electrification project. This means that the following sections will not be electrified at the moment:

• between Oxford and Didcot Parkway

• between Filton Bank (Bristol Parkway to Bristol Temple Meads)

• west of Thingley Junction (Bath Spa to Bristol Temple Meads)

• Thames Valley Branches (Henley & Windsor)

This he said will enable some electric train operation sooner between Paddington, Didcot, Bath and Cardiff but no electric trains to Bristol yet.

They said:

A GWR spokesman said: “Customers will be disappointed at these further delays to parts of the electrification programme even following Sir Peter Hendy’s review earlier this year.

“However, we are determined our customers should not wait a day longer than absolutely necessary to see the benefits they’re expecting from what will be the biggest fleet upgrade in a generation.

“We have already made significant progress with the DfT in finding ways to provide the improvements we planned, without the electrified infrastructure expected following the Hendy Review. We are reviewing the implications of today’s announcement with the Department and hope to say more soon.”

The NAO says

that the investment measure of the 2.4:1 benefit-cost ratio expected by the DfT will now be 1.6:1 after the latest review.

Ms Meg Hillier MP, chair of the committee of public accounts said; “The Department for Transport and Network Rails’ failure to integrate crucial elements of the modernisation into one programme from the start has cost passengers and taxpayers’ time and money,” “I do not understand why it took the Department two years from agreeing to buy new trains to produce a business case.”

Rail.co.uk comment

This is almost a re-run of the West Coast Main Line upgrade and Thameslink projects where poor planning and undeliverable timescales were agreed by the DfT. The NAO says it hopes that lessons will be learned for the future.

So will passengers and taxpayers.

External Links

• National Audit Office
• GOV.UK