Funding decision gives boost to Bombardier in bid for £1bn rail deal
DERBY train-maker Bombardier's chances of winning a £1 billion contract have been given a shot in the arm after ministers confirmed that the trains will be entirely funded by the Government.
Instead of the bidders having to raise funding from the private sector to pay for the trains, the carriages for Crossrail will all be paid for by the public sector.
This means the bidders will not be judged on their ability to raise private finance.
It is generally accepted that Litchurch Lane-based Bombardier lost out on a previous contract, the £1.4 billion Thameslink deal, because the preferred bidder, German firm Siemens, had a superior credit rating and would be able to raise cash more easily to pay for the 1,200 carriages.
Business Cards From Only £10.95 Delivered www.myprint-247.co.ukView details
Our heavyweight cards have FREE UV silk coating, FREE next day delivery & VAT included. Choose from 1000's of pre-designed templates or upload your own artwork. Orders dispatched within 24hrs.
Terms: Visit our site for more products: Business Cards, Compliment Slips, Letterheads, Leaflets, Postcards, Posters & much more. All items are free next day delivery. www.myprint-247.co.uk
Contact: 01858 468192
Valid until: Sunday, May 26 2013
At the end of 2011, the then Transport Secretary, Justine Greening, refused a request by Mayor of London Boris Johnson to buy the Crossrail trains directly using public money.
But the Government has now had a change of heart.
Parliamentary Under Secretary of State for Transport Stephen Hammond said: "The decision reflects the unique circumstances that apply to Crossrail.
"As a new route that is currently under construction, it has no inherited train fleet and, without new trains, the service cannot open.
"Transport for London and the Government believe this decision is an appropriate course of action to deliver a very complex and unique infrastructure project within the delivery timetable."
Bombardier is one of four companies bidding for Crossrail. The others are Siemens, Spanish firm CAF and Japanese company Hitachi.
Mr Hammond said trains would need to be ordered next year so deliveries could start in spring 2017 – ahead of the opening of Crossrail's central tunnel section in late 2018.
He said: "Any delay in the rolling stock order would place this delivery timetable in jeopardy."
He said the new funding system would simplify contract negotiations and make sure the contract can be awarded on time.
Derby North MP Chris Williamson, who tabled a Parliamentary motion last year urging ministers not to use the same financing model for Crossrail as it did for Thameslink, said: "On face value, this appears to be a positive step but we will need to look at the small print."
Legal expert Kevin Bampton, head of the school of law and criminology at the University of Derby, said: "There is a possibility this will benefit Bombardier because it takes the pressure off the financing aspect and provides more focus on other qualities of each bid, such as the social and economic factors."
As one of the bidders for Crossrail, Bombardier is not allowed to comment directly on the procurement process.