Grayling under fire
NAO report reveals Transport Secretary cancelled MML wires four months before making the announcement.
SECRETARY of State for Transport Chris Grayling made the decision to cancel the Midland Main Line electrification project north of Kettering in March 2017 - four months before he announced it on July 20 2017 ( RAIL 832), and almost three months before the General Election.
And according to the National Audit Office investigation into the Department for Transport’s decision to cancel three rail electrification projects, bi-mode trains with the required speed and acceleration needed for the MML did not exist when Grayling made his announcement that wires would be cancelled and a fleet of bi-modes would be ordered by 2022.
Published on March 29, the NAO report looked at the reasons for Grayling’s decision to cancel the MML, Cardiff-Swansea and Windermere branch wiring. As well as the MML, the Lake District branch was also a March casualty, although the Welsh project was merely delayed while the business case was reviewed.
Grayling wrote to the Chancellor in February 2017 highlighting how £1.8 billion could be saved. This included a £400 million reduction in Network Rail spending during Control Period 5 (2014-19), £800m of asset sale income to be generated by 2019-20, £300m of NR efficiencies and £300m from the DfT.
The NAO stated that it was “too early to tell the extent to which the Department will be able to deliver the benefits of electrification without electrifying the three routes”.
It did report that the MML cost had risen from £633m in October 2013 to £1,181m in November 2014.
It also highlighted the increased track damage and higher energy costs of bi-mode trains, and said that DfT had not fully costed the environmental and future financial implications of the MML and Windermere decisions.
Transport Select Committee Chairman Lilian Greenwood called the report “deeply frustrating”.
She added: “It is frustrating because it shows the Secretary of State took the decision on the Midland Main Line in March 2017.
“It is frustrating because it shows the Secretary of State was less than candid with the Committee when we sought to investigate this during our evidence session last October. Even when the Committee recalled him in January, we did not get the full story.
“This report confirms we were right to be worried about the decision-making process, and the openness and transparency with which the Department and the Secretary of State have presented their case.”
A DfT spokesman told RAIL: “We are investing in the biggest modernisation of our railways since the Victorian era, spending billions of pounds across the
country to deliver faster, more frequent, and more comfortable services with more seats.
“As this report makes clear, we are focused on delivering better trains and services to passengers more quickly, at better value for money for the taxpayer, without the significant disruption to services that electrification can cause.”
The report states the decision to cancel the schemes was made because Network Rail’s CP5 investment portfolio was no longer affordable, and that the lack of ability to borrow funds once NR was made a public body rendered the schemes unaffordable.
It was estimated £105m would be saved from the CP5 budget by cancelling the schemes, and £1,385m from the CP6 (2019-24) rail investment plans.
The decision to cancel CardiffSwansea was made in July 2017, following continued calculations. It was concluded that £337m could be saved (£562m had previously been identified). The Benefit:Cost Ratio (BCR) had fallen from 0.6:1 to 0.3:1.
By the time it was cancelled, the NAO said the BCR for the MML wiring was 0.8:1, down from the initial figure of between 4.1:1 and 13.1:1 when the scheme was first announced. The lower assessment included the assumption that from 2033 passengers travelling between the capital and Sheffield would use HS2 instead of the MML.
For Cardiff-Swansea, the DfT had estimated that the cost escalation of the project and the decision to buy bi-modes for the Great Western Main Line (a DfT decision) meant electrification was not needed. Costs rose from £295m in March 2014 to £433m in August 2016.
Meanwhile, costs for the Windermere branch more than doubled from £16m to £35m.