Ghani specifies UK benefits from HS2 train contracts
GOVERNMENT cannot dictate that bidders for the HS2 trains contract must build the sets in the UK.
However, the Utilities Contract Regulations do include a scoring mechanism that assesses each bidder’s plans for developing skills, education and employment opportunities, and for promoting supply chain opportunities via the supply and maintenance of the new trains.
In a Commons Written Reply to Kevan Jones (Labour, North Durham), HS2 Minister Nusrat Ghani explained: “Procurement of the new HS2 Phase 1 fleet is being undertaken in accordance with the Utilities Contract Regulations 2016. The regulations require all tenderers be treated equally on a non-discriminatory basis. This means that HS2 cannot mandate that the design and manufacture of the new fleet should be undertaken in the UK.”
Jones had raised the issue following revelations earlier this year that Siemens would build around 40% of its new Piccadilly Line trains abroad.
Ghani told Jones on April 9: “All parties invited to tender are required to make clear in their proposal how the manufacture and maintenance of the rolling stock will add value to the UK economy and contribute to the delivery of the HS2 programme strategic goals. All such commitments made will be included in the contract with the winning bidder.”
Ghani also told Alex Cunningham (Labour, Stockton North): “HS2 cannot mandate that the design and manufacture of the new fleet should be undertaken in the UK. However, the procurement has the potential to realise many benefits for the UK - for example, a ‘supply chain mapping’ exercise conducted by HS2 identified over 270 potential tier 2 and 3 rolling stock suppliers, over 70% of which are UK-based.
The companies bidding for the contract to build 54 classic compatible trains that will enter traffic in 2026 are Alstom, CAF, Siemens, Talgo and a Bombardier/ Hitachi joint venture. The contract is due to be awarded next year.
Ghani added: “To support UK suppliers, HS2 will ensure they are fully aware of specific opportunities through the contract opportunities table published on its website, through targeted ‘meet the contractor’ events, and through regular engagement. To date, this approach has ensured that over 99% of direct and indirect HS2 awarded contracts have been to UK-based organisations, over 70% of which are SMEs.”
Jones had also asked why Government tendering can write UK content or Gross Value Added into public procurement, but cannot do so for rolling stock contracts.
Responding on April 9, Rail Minister Andrew Jones said: “Rolling stock procurement is undertaken through fair and open competition, usually by train operators as part of their franchise commitments. Such procurements must be undertaken in line with the relevant procurement regulations in force at the time.”
When asked by Kevan Jones if Siemens or Talgo had submitted a supply chain development plan as part of their commitment to build factories in Goole and Longannet respectively, Andrew Jones confirmed that Government had not received these, but said Talgo had committed to the creation of five jobs in the supply chain for every job at its UK factory ( RAIL 876), while Siemens expects to indirectly create 1,700 jobs in the supply chain through its UK facility.