Ja­son Cham­ber­lain

JA­SON CHAM­BER­LAIN, Part­ner, As­set Fi­nance at global law firm Bryan Cave Leighton Pais­ner LLP, con­sid­ers the Depart­ment for Trans­port’s plans for mar­ket-led proposals in rail

Rail (UK) - - Contents -

“Grayling was right: the Government does not have a mo­nop­oly on good ideas, but it cer­tainly seems to have a mo­nop­oly on not nec­es­sar­ily joined-up ideas that it thinks is a good idea to pub­lish all at once.”

THE Depart­ment for Trans­port has re­cently turned to the pri­vate sec­tor for ideas, be­cause as Sec­re­tary of State for Trans­port Chris Grayling de­clared: “Govern­ments do not have a mo­nop­oly on good ideas for the rail­ways.”

Against a back­drop of largely strip­ping Net­work Rail of re­spon­si­bil­ity for up­grad­ing the railway, the DfT launched its Rail mar­ket-led proposals - Call for Ideas.

At the same time, but ring-fenced from the call for third-party ideas, the DfT has called for spe­cific third-party ideas on much-needed rail ac­cess from the south to Heathrow Air­port - what it calls the South­ern Rail Link to Heathrow (SRLtH).

Sep­a­rately (yet not), it has pushed out an­other rail en­hance­ments ini­tia­tive - Rail Net­work En­hance­ments Pipe­line: A New Ap­proach for Rail En­hance­ments - to cre­ate a pipe­line (the RNEP) down which it will put the rail en­hance­ments government funds. Sounds as if they need some ideas in the acro­nym depart­ment!

The DfT wants to use the mar­ket-led proposals it re­ceives in re­sponse to its Call for Ideas to help cre­ate some “con­testa­bil­ity”.

Con­testa­bil­ity is some­thing you do with or against or around Net­work Rail in the de­liv­ery of railway in­fra­struc­ture. In a cir­cle as round as it is un­break­able, the DfT has en­dorsed Net­work Rail’s re­sponse en­dors­ing the in­de­pen­dent re­view Net­work Rail com­mis­sioned into how third par­ties com­pete with NR in de­liv­er­ing railway in­fra­struc­ture, which Net­work Rail com­mis­sioned un­der pres­sure from the DfT to make NR sub­ject to com­pet­i­tive pres­sure when de­liv­er­ing railway in­fra­struc­ture.

And then, apart from all that, gov­ern­men­towned Net­work Rail de­clared it­self open for busi­ness to third-party in­vest­ment to develop the up­grades it has iden­ti­fied. Per­haps NR un­der­stands con­testa­bil­ity as be­ing con­testa­bil­ity with the government for ideas and in­vest­ment.

So, Grayling was right: the Government does not have a mo­nop­oly on good ideas, but it cer­tainly seems to have a mo­nop­oly on not nec­es­sar­ily joined-up ideas that it thinks is a good idea to pub­lish all at once.

But if the pub­lic sec­tor is con­strained in how much it spends im­prov­ing the railway, the pri­vate sec­tor is the only place left to look to fill the gap. And there is ob­vi­ous value in es­tab­lish­ing an en­hance­ments pro­gramme, so that the in­dus­try and its sup­ply chain can plan.

The right idea then, but what will be crit­i­cal to whether any­thing tan­gi­ble comes of it will be if the DfT can gen­er­ate enough mar­ket con­fi­dence that there is the op­por­tu­nity to re­alise en­hance­ments ideas, in­clud­ing to mon­e­tise them. That con­fi­dence is gen­er­ated by ex­pec­ta­tion man­age­ment of pipe­line con­tent, cer­tainty of process, and like­li­hood of re­ward.

So, who is in the mar­ket to make mar­ket-led proposals?

A mar­ket-led pro­posal (MLP) is an “un­so­licited bid” to en­hance the railway (un­so­licited, that is, if you ig­nore all the so­lic­it­ing by the DfT for mar­ket-led proposals), which the DfT has not al­ready sent down the RNEP. Any­one not pub­licly funded can make a mar­ket-led pro­posal.

Proposals have been split into two types: ‘Cat­e­gory 1 MLPs’ and ‘Cat­e­gory 2 MLPs’.

Cat­e­gory 1 MLPs are those which do not re­quire pub­lic money, government guar­an­tee or ex­clu­siv­ity. You might call them ‘Magic Bean Ideas’, be­cause the idea that there are dor­mant rail en­hance­ments projects out there that do not re­quire some form of money, un­der­pin­ning or ex­ploita­tion rights (or a com­bi­na­tion of those) be­longs in a fairy tale.

On the as­sump­tion that we won’t be see­ing the rail equivalent of a gi­ant beanstalk any time soon, let’s focus on Cat­e­gory 2 MLPs, which means the fol­low­ing:

We are re­ally talk­ing about mar­ket-led proposals where pro­mot­ers are look­ing for some sort of government sup­port.

Pro­mot­ers must develop their Cat­e­gory 2 MLPs at their own risk and cost.

At some point a pro­moter will have to run the gaunt­let of the DfT’s gov­er­nance process.

That process - the so-called ‘ RNEP Frame­work’ - con­tains the five stages or gate­ways that a pro­moter of a railway en­hance­ment must go through be­fore it will be made (be­low).

Th­ese are what you might call in­stead the five Ds of Dodge­ball - Dodge, Duck, Dive, Dip and Dodge - be­cause the owner of an idea to en­hance the railway must do each of th­ese things in or­der to see that en­hance­ment re­alised. It looks a bit like an ob­sta­cle course. To those fa­mil­iar with government-led pro­cure­ment, it prob­a­bly con­jures up im­ages of a ‘tough mud­der’ with caged crawls, elec­tric shocks and but­ter-smeared mon­key bars.

De­spite A New Ap­proach sug­gest­ing that an idea can en­ter the RNEP at any stage, it still needs a government-en­dorsed busi­ness case and to have passed the de­ci­sion point for that stage. So, in truth, you prob­a­bly can­not skip a D - un­less you’ve Dodged, Ducked and Dived, you won’t be Dip­ping.

What’s cer­tain is pro­cure­ment. The Call for Ideas says “pro­cure­ment is used to en­sure value for money”. So, if you have a mar­ket-led pro­posal, it will be con­tested to some de­gree. It’s just that at this point you have no idea to what de­gree, be­cause the mes­sag­ing on pro­cure­ment is com­pletely open-ended.

It will be in­ter­est­ing to see what kind of mar­ket the DfT has man­aged to cre­ate by im­pos­ing a dead­line for the sub­mis­sion of mar­ket-led proposals (July 31).

We know that HS4Air has been put for­ward - a pro­posal to join up Heathrow and Gatwick to both High Speed 1 and 2 by by-pass­ing Lon­don (a sort of high-speed M25 railway), an Source: Depart­ment for Trans­port.

am­bi­tious scheme that seems to tick a lot of the mar­ket-led ini­tia­tive’s boxes. Then there is Cross­rail to Ebb­s­fleet (C2E), a plan to ex­tend the ex­ist­ing Cross­rail route out to Kent. Both are al­ready in the pub­lic do­main. Not much else is!

C2E is re­ally a pub­licly backed scheme, so strictly not a mar­ket-led pro­posal. But its sub­mis­sion is symp­to­matic of the Hunger

Games com­pe­ti­tion that all th­ese ini­tia­tives cre­ate. C2E’s back­ers prob­a­bly feel they have no choice but to throw their hat into the ring now be­cause it is com­pet­ing for recog­ni­tion with all Cat­e­gory 2 MLPs, all en­hance­ments that are al­ready in the RNEP, and what­ever Net­work Rail is still al­lowed to do.

And that’s re­ally the point of all this: not to cre­ate new en­hance­ment ideas, but to cre­ate a fo­cal point for the DfT to mar­shal them.

In con­trast, the SRLtH im­poses no such dead­line. How­ever, while ring-fenced from the wider call for ideas, SRLtH is ef­fec­tively the first con­crete man­i­fes­ta­tion of the mar­ket-led pro­posal ini­tia­tive. It in­vites in­ter­est in dis­cussing mar­ket-led ideas for a south­ern rail link, and over­lays A New Ap­proach’s RNEP Frame­work to DfT de­ci­sion-mak­ing.

The main­stream press has spo­ken of five proposals for south­ern Heathrow rail ac­cess: Heathrow South­ern; the Wind­sor Link Railway; a light rail solution; an un­spec­i­fied pro­posal by MTR; and an­other pro­posal where the only thing known pub­licly about it is that noth­ing is known pub­licly about it. It’s not HS4Air.

The SRLtH proposals that are known about seem in­no­va­tive and gen­uinely dis­tinct from each other, mak­ing the DfT’s job of as­sess­ing their rel­a­tive strengths and weak­nesses chal­leng­ing and tempt­ing for the DfT to cher­ryp­ick.

Does the DfT re­ally want you to build your own railway? Too con­testable per­haps?

The DfT said in the Call for Ideas that it will pro­tect valid in­tel­lec­tual prop­erty (that is, in­tel­lec­tual prop­erty pro­tected by leg­is­la­tion and common law). In that con­text, that means not shar­ing that in­tel­lec­tual prop­erty with oth­ers.

Heathrow South­ern’s pro­posal links the south to Heathrow Air­port by build­ing, op­er­at­ing and main­tain­ing eight miles of new railway, over which DfT-cho­sen train op­er­a­tors op­er­ate fran­chised ser­vices. The new route its back­ers have iden­ti­fied joins up Ter­mi­nal 5 with the South West Main Line, Padding­ton and HS2. They claim a pro­pri­eto­rial in­ter­est in their ideas, and want to op­er­ate the railway they hope to build.

But at the SRLtH mar­ket-sound­ing day to pro­mote SRLtH, when Heathrow South­ern chal­lenged the DfT about the pro­tec­tion of in­tel­lec­tual prop­erty in mar­ket-led proposals, the DfT’s spokesman point­edly said that

“It looks a bit like an ob­sta­cle course. To those fa­mil­iar with government-led pro­cure­ment, it prob­a­bly con­jures up im­ages of a ‘tough mud­der’ with caged crawls, elec­tric shocks and but­ter-smeared mon­key bars.”

Rail Net­work En­hance­ments Pipe­line frame­work

KIM FULLBROOK.

Heathrow Ex­press 332010 passes West Eal­ing on Septem­ber 21. Rail ac­cess from the south to Heathrow Air­port is a prime ex­am­ple of calls for mar­ket-led proposals for new rail schemes.

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.