1000 new rail carriages for UK Railways

On the face of it this is a simple story. The Government has promised to build 1000 carriages and lease them to the train operating companies[1]. This is equivalent to a 10% capacity increase or roughly one years growth. All this to help reduce overcrowding.

However, Stock is already available from the leasing companies and several franchise holders have recently put modern units off lease which could be used else where. Plus in an emergency there is plenty of Mk3 carriages which could be used with diesel engines (Although potentially more costly). For a good analysis of some of the considerations on off lease stock and hire possibilities see this forum post

It would seem that franchise operators have already proved that they could increase capacity but they are just not interested. Indeed some operators have already suggested that the cost of leasing extra stock to ease overcrowding is the responsibility of the government (See wikipedia: FGW stock cuts).

Bearing all this in mind it is clear that the government has now had enough. Last year it ordered an investigation by the Office of the Rail Regulator into an alleged monopoly by the three train leasing companies[2]. The government estimated that the leasing companies were over charging by up to 50 million a year.

The ORR looks likely to refer the issue to the Competition Commission [3] having found that the leasing sector had:

"higher prices and lower quality of service than would be the case in a more competitive market"

As a response to this Angel Trains one of the leasing companies has pulled out of negotiations with Virgin Trains over new trains citing the ongoing uncertainty due to the investigation [3].

So in what appears to be the latest move in a high pressure game of rail chess the government has stated that it will build 1000 new carriages and lease them direct to the train operating companies.

Basically this is sending a clear message to the train leasing companies that if they are not prepared to act fairly then the government will cut them out or undercut their prices. In a sense the government is attempting to force competition onto the rigged market.

I agree with the Liberal Democrat transport spokesman Alaister Carmicheal that the government should allow network rail to act as a leasing company to give the better integration between the operators and the infrastructure. This would create two partners in running a train rather than the complicated three partners at the moment.

So the real story is not the extra thousand carriages but the real commitment by the government to create structural economic change in the industry.