Stagecoach Lose EMT to Abellio / Disqualified from 3 Franchises

[Sir TophamHatt]

Stagecoach out.

Abellio in.

 

Quote

The Department for Transport (DfT) has this morning announced its intention to award the new East Midlands Franchise to Abellio.

 

Separately, a senior DfT official has verbally informed Stagecoach that its bid for the East Midlands franchise, and its bids for the South Eastern and West Coast Partnership contracts, have been disqualified. Stagecoach has been told that its bids were determined as non-compliant principally in respect of pensions risks.

 

Bidders for these franchises were asked to bear full long term funding risk on relevant sections of the Railways Pension Scheme. This is at a time when The Pensions Regulator is seeking additional funding because of serious doubts over the Government's ongoing support for the industry-wide scheme.
 

Clearly, Stagecoach is extremely concerned by these developments, particularly as it bid consistent with industry guidance issued by the Rail Delivery Group and shared with the DfT. Stagecoach also has more than two decades of rail experience and it undertook extensive work with local stakeholders to develop high quality proposals to improve each of these rail networks.

 

Stagecoach is now seeking urgent clarification from the DfT on the issues involved.

 

Does this mean Virgin will also disappear as their West Coast partnership was led by Stagecoach.

Stormy times ahead!

Edited June 24, 2019 by Sir TophamHatt

[Joseph_Pestell]

I don't follow the franchise processes closely but this sounds as though Stagecoach were putting in their own bid for WCML without the Virgin brand.

 

But more widely, you are right, this highlights problems ahead. TUPE is never straightforward and if HM Govt is now off-loading responsibility for future pensions (or trying to), they may find there are no bidders for TOC franchises. And then what????

 

Just been through a similar problem locally when waste collection services were transferred between private operators. Local Govt (i.e. the taxpayer) has been left with the liability.

[DY444]

Rumour has it that all three bids for the SE franchise were non-compliant on the pension issue which is why the expected date for the announcement has come and gone.

[The Stationmaster]

There has been an ongoing battle recently between DfT and bidders in respect of support for pension fund deficits.  Oddly  - in view of the amount of money that the existing franchisees have jointly taken out of the current franchise - the implication of the report (which of course might not be accurate in detail) was that the existing West Coast section of the fund is in deficit, as are others in this bidding round.

 

Stagecoach apparently had recently made it clear - in response to a DfT communication -  that they were not prepared to pay up to eliminate the deficit in any section of the fund involved in a franchise they were bidding for.  Hence their bids have now been ruled non-compliant with DfT obviously implementing the threat requirement they had recently made clear to the franchise bidders.  It would be interesting to know from anybody on here who is in the West Coast Section of the fund exactly what state it is in - which should give us an indication of the extent to which Stagecoach (principally) and Virgin have or haven't supported the fund during their tenure of the franchise.

Edited April 10, 2019 by The Stationmaster

[The Stationmaster]

34 minutes ago, Joseph_Pestell said:

I don't follow the franchise processes closely but this sounds as though Stagecoach were putting in their own bid for WCML without the Virgin brand.

 

But more widely, you are right, this highlights problems ahead. TUPE is never straightforward and if HM Govt is now off-loading responsibility for future pensions (or trying to), they may find there are no bidders for TOC franchises. And then what????

 

Just been through a similar problem locally when waste collection services were transferred between private operators. Local Govt (i.e. the taxpayer) has been left with the liability.

It's not really anything to do with TUPE or offloading responsibility for pensions as I see it.  If my own section of the fund is any example it is up to the current employer to ensure, with the trustees, that their section of the fund does not go into deficit.  Hence when current actuarial calculation showed last year that it was technically in deficit both the employer's and employees' contributions were increased.  The full assessment has not been carried out this year - they are only required every three years - but an assessment has shown the fund is now back in surplus although that might not necessarily be the case in a year's time of course.

 

As I hinted above I do wonder to what extnet certain franchisees have been supporting, or not supporting, the relevant section of the fund while at the same time making plenty of money out of the franchise - West Coast being a prime example.  

[Legend]

Interesting, especially with constant rumblings north of the border that Abellio may have the the Scotrail franchise taken off them due to poor performance , yet here they are awarded the East Midlands Franchise .  Have to say any time I've used Scotrail they are fine , but I think they are having troubles especially in the East of the country where there are many cancellations of trains due to lack of drivers .  Abellio seems to be a bit of a swear word for Edinburgh commuters!

 

 

['CHARD]

7 minutes ago, Legend said:

Interesting, especially with constant rumblings north of the border that Abellio may have the the Scotrail franchise taken off them due to poor performance , yet here they are awarded the East Midlands Franchise .  Have to say any time I've used Scotrail they are fine , but I think they are having troubles especially in the East of the country where there are many cancellations of trains due to lack of drivers .  Abellio seems to be a bit of a swear word for Edinburgh commuters!

 

 

 

No cross-contamination connection in the franchise process here though: Transport Scotland specify and negotiate ScotRail, entirely separately from DfT.

[Legend]

7 minutes ago, 'CHARD said:

 

No cross-contamination connection in the franchise process here though: Transport Scotland specify and negotiate ScotRail, entirely separately from DfT.

 

Yep but you would have thought they would be aware .   Left hand, Right hand etc

 

[Robert Shrives]

18 minutes ago, Legend said:

 

Yep but you would have thought they would be aware .   Left hand, Right hand etc

 

That is the rub ! And again its the works who have loyally paid into a good scheme who are at risk again - many paid in when wages were low hoping to see light at the end of the tunnel having taking a vocation in the public service industry- when those words actually meant something compared to the sham shadows of today.  Come the day of the revolution ( not that far away) the wall will not be long enough.

Robert    

[woodenhead]

My previous company's pension scheme had three elements for me, the original owner's final salary, the new final salary and then the Money purchase scheme.

 

The first stayed with the original owner's company, but the second two had to be split up between companies competing to buy our company and part of my pension scheme is now with a competitor that I have never actually worked for and never intend to.

 

Pensions - long term savings which you seem to have little control over.

[Joseph_Pestell]

57 minutes ago, The Stationmaster said:

It's not really anything to do with TUPE or offloading responsibility for pensions as I see it.  If my own section of the fund is any example it is up to the current employer to ensure, with the trustees, that their section of the fund does not go into deficit.  Hence when current actuarial calculation showed last year that it was technically in deficit both the employer's and employees' contributions were increased.  The full assessment has not been carried out this year - they are only required every three years - but an assessment has shown the fund is now back in surplus although that might not necessarily be the case in a year's time of course.

 

As I hinted above I do wonder to what extnet certain franchisees have been supporting, or not supporting, the relevant section of the fund while at the same time making plenty of money out of the franchise - West Coast being a prime example.  

 

Re-read your post more thoroughly and I take your point.

 

I don't blame Stagecoach (or any other bidder) for objecting to an expectation that they should make up someone else's deficit. But in the case of WCML, they are the existing operator. Was none of this thought through when the franchising system was put in place?

[Talltim]

Lose

[pete_mcfarlane]

The biggest change I can see is the splitting of the Norwich-Liverpool service, which I think is a bad move as it's a really useful service. It will become Liverpool - Nottingham, and Norwich - Nottingham - Derby. It also seems that the GN&GE joint line will actually get a useful service again.

 

http://maps.dft.gov.uk/east-midlands-rail-franchise/

 

 

[wombatofludham]

"New intercity fleet" and "Bi-mode trains" suggest a follow on order for the Anglia intercity Flirts, but "refurbished regional trains" for the local and rural routes is interesting - TPE Desiros? TfW Class 175s? Any 170s not yet blagged? More "D" trains?

[edit] Unless of course it is referring to the Meridians being re-allocated to the inter-urban routes...

I also wonder if the promise to test Hindenburg trains is an indication of where some of the 321 Gasbag units might end up?

Edited April 10, 2019 by wombatofludham

[The Stationmaster]

1 hour ago, Joseph_Pestell said:

 

Re-read your post more thoroughly and I take your point.

 

I don't blame Stagecoach (or any other bidder) for objecting to an expectation that they should make up someone else's deficit. But in the case of WCML, they are the existing operator. Was none of this thought through when the franchising system was put in place?

I don't know the precise wording of the franchise agreement but once they got the franchise they became the employer and with that went the employer's pension responsibility.  Presumably - as in other sections of the fund - they were represented among the trustees and in any event every section of the fund is subject to a full actuarial assessment every three years following which the trustees are required to act to deal with any deficit.

 

In the section to which I belong the employer, the employees, and the pensioners are all represented among the trustees  and as far as I am aware that is the requirement for every section of the fund (the BT Police section is, I think, possibly a bit different).   If there is a deficit in the West Coast section then it would seem not at all difficult for anybody to argue that Stagecoach/Virgin would appear to have been lacking in their involvement and contributions but I have not seen any figures in the press which have broken down the total deficit of the various sections involved.  In the case of West Coast we are looking at almost 22 years which is rather worrying if they have been ignoring the question of pension contributions.

 

Mind you the bearded one has always been very quick to wheel out the legal trade when it comes to protecting his millions. 

[westie7]

385/HST aside, Part of Abellio ScotRail's problem in and around Edinburgh just now is that so many drivers left to go to TPE for more money and there is only so much training capacity whilst taking guys of jobs for HST training

[caradoc]

4 hours ago, pete_mcfarlane said:

The biggest change I can see is the splitting of the Norwich-Liverpool service, which I think is a bad move as it's a really useful service. It will become Liverpool - Nottingham, and Norwich - Nottingham - Derby. It also seems that the GN&GE joint line will actually get a useful service again.

 

http://maps.dft.gov.uk/east-midlands-rail-franchise/

 

 

 

Good point, on the odd occasion I have used the Norwich/Liverpool service there seemed to be quite a few passengers travelling through Nottingham. However, if it has to be split, making it a Norwich/Birmingham service might be more useful, taking over one of the Cross-Country paths between Nottingham and New St ?

 

[Joseph_Pestell]

3 minutes ago, caradoc said:

 

Good point, on the odd occasion I have used the Norwich/Liverpool service there seemed to be quite a few passengers travelling through Nottingham. However, if it has to be split, making it a Norwich/Birmingham service might be more useful, taking over one of the Cross-Country paths between Nottingham and New St ?

 

 

I think they try to avoid terminating trains at BNS.

[caradoc]

2 minutes ago, Joseph_Pestell said:

 

I think they try to avoid terminating trains at BNS.

 

And with good reason, however 50% of the half/hourly Nottingham/New St service does terminate there !

['CHARD]

1 hour ago, westie7 said:

385/HST aside, Part of Abellio ScotRail's problem in and around Edinburgh just now is that so many drivers left to go to TPE for more money and there is only so much training capacity whilst taking guys of jobs for HST training

 

Agreed, and I can't help thinking it's slightly disingenuous to blame Abellio for such macro industry factors (TPE driver exodus) that are realistically beyond their influence, and impossible to quantify and adequately prepare for at the time of franchise bidding.

[Joseph_Pestell]

Bought a copy of the April Modern Railways at lunchtime. Apparently this pensions deficit problem is having an effect on all the franchise renewals, especially SouthEastern.

[Joseph_Pestell]

56 minutes ago, caradoc said:

 

Good point, on the odd occasion I have used the Norwich/Liverpool service there seemed to be quite a few passengers travelling through Nottingham. However, if it has to be split, making it a Norwich/Birmingham service might be more useful, taking over one of the Cross-Country paths between Nottingham and New St ?

 

 

Different operator of course, but a Norwich - Birmingham could potentially be joined to a Stansted - Birmingham en route to save track capacity.

[ColinK]

I wonder if the Liverpool - Norwich service split is partly a result of ticketing, with people buying split tickets not showing as through passengers?

 

In addition, the DfT have been pushing for this service to be split for quite a while, perhaps to give more geographically convenient franchise areas, I don’t think passenger consideration has been a big factor.

[ess1uk]

I liked the EMT livery too.

 

[ess1uk]

I liked the EMT livery too.