Rolling Stock: Purchasing Models

13 Feb

Question

The question session on rolling stock purchasing models, held in the House of Commons, revolved around exploring potential alternative financing methods for acquiring rolling stock. The discussion highlighted both the economic and strategic dimensions of such funding models, focusing on efficiency and cost-effectiveness.

Key Contributions:

Graham Leadbitter raised concerns about the financial impact of the current leasing models, which result in over £1 billion in profits for leasing companies. He emphasized the potential benefits of reinvestment into the railway network and proposed considering models like EUROFIMA or a publicly owned Rolling Stock Company (ROSCO) to reduce costs.

£1 billion

Amount of profit currently extracted by rolling stock leasing companies from the railway system annually.

Heidi Alexander responded, acknowledging the financial burden of acquiring existing rolling stock outright, especially given the constraints on public finances. She informed the House of ongoing dialogue with EUROFIMA and the evaluation of options to incorporate European financing mechanisms.

Billions in taxpayers’ money

Estimated cost of purchasing existing rolling stock outright.

Specific Issues and Answers:

The profitability of existing leasing companies as a critical issue, with significant profits potentially reinvested into the rail infrastructure.
The cost constraints of outright purchasing versus leasing.
Alternative financing models being considered for rolling stock, including international options.

Outcome

The debate session did not conclude with immediate policy shifts, but it highlighted ongoing considerations within the UK government for alternative funding models for rolling stock procurement. The introduction of the Great British Railways Bill suggests further developments and discussions are anticipated.

Key Contributions

Graham Leadbitter

SNP

Questioned the merit of alternative funding models, emphasizing the significant profits leasing companies make and the potential to reinvest in the network.

Heidi Alexander

Reaffirmed the government's commitment to lease rolling stock under public contracts, emphasizing continuity and efficiency through a singular strategic approach.

Original Transcript

Graham Leadbitter

Moray West, Nairn and Strathspey

SNP

Question

UIN: 902765

6. What assessment she has made of the potential merits of using alternative funding models to purchase rolling stock.

The Secretary of State for Transport

Heidi Alexander

09:59

As part of our reforms to the railway, we have set out that we will continue to lease rolling stock when we take contracts into public ownership, but we will apply a single directing mind approach to eliminate barriers to sharing rolling stock better across the network.

We will consider the best funding and financing structures for future orders and contracts in partnership with private capital.

Graham Leadbitter

10:00

At the moment, the rolling stock leasing companies take more than £1 billion of profit out of the railway. A substantial amount of that could be reinvested in improving the railway network.

With the Bill for Great British Railways due to come to Parliament soon, will the Secretary of State look seriously at alternative financing models such as EUROFIMA—the European company for the financing of railroad rolling stock—or even a publicly owned ROSCO that could deliver rolling stock at a considerably lower price?

Indeed, will she be more socialist and more ambitious with the Bill?

Heidi Alexander

I assure the hon. Gentleman that I do not lack any ambition when it comes to Great British Railways. It would cost billions in taxpayers’ money to buy existing rolling stock, at a time when there are many pressures on the public purse.

My officials have been engaging regularly with EUROFIMA to consider the potential for UK membership and how EUROFIMA finance could be deployed in the UK.

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