Friday 30th Sep 2016 - Logistics Manager

DfT to investigate rolling stock leases

The Department for Transport said that it is investigating the cost of rail rolling stock leases.

The DfT said that it recognises the important role rolling stock leasing companies have had, in investing over £4 billion in new trains and carriages through competitive tender over the last 10 years. However, it said that these companies also have a duty to ensure that best value is achieved for fare payers and government money.

On the information and analysis available, the DfT is not satisfied the prices charged for the rolling stock which leasing companies inherited from British Rail are fair and competitive. It said that the department’s contention that there is a lack of effective competition within this market and lack of transparency as to how leasing charges are applied. The grounds for a market investigation into leasing costs are therefore clear.

It is estimated that each year the rail industry pays over £1 billion to rolling stock operating companies to lease trains and carriages. The Dft said that it is important those contracts represent good value as the ultimate cost is borne by the government or fare payers.

The DfT has referred the matter to the Office of Rail Regulation under section 131 of the Enterprise Act 2002.