4 June 2010 | Lindsay Clark

The UK Department for Transport (DfT) has announced a review of the procurement of passenger train carriages following a report from the National Audit Office that warns of costs rising by a half.

The report, published today, highlights the increasing cost of procurement of 1,300 additional carriages. The plan to purchase new carriages was covered in a 2007 white paper.

“In the worst cases reviewed, costs had risen by almost 50 per cent since 2007,” the NAO report says. “Such underlying cost movements can be moderated by maintaining competitive tension during procurement but they will inevitably exert upward pressure on the cost of securing extra capacity.”

Transport secretary Philip Hammond said the report reinforced his “concerns about Labour’s announced new carriage procurement programme”.

“Since that announcement was made in 2007 the growth in passenger numbers has not materialised and costs have soared, leaving Labour’s plans in tatters,” he said.

The DfT has now ordered an “urgent reappraisal” of the government’s train carriage purchasing project.

For the five years to March 2014, the Labour government had allocated £15.3 billion to support and improve the safety, reliability and capacity of rail services in England and Wales, including the carriage procurement programme.

However, the economic climate meant the expected rise in demand may not materialise, NAO head Amyas Morse said.

“The DfT used a broadly sound framework to develop plans for adding capacity to the rail network. These plans were developed in a stronger economic climate. However, we believe that it needs to implement these plans flexibly in light of current conditions, in order to protect value for money, and to be continually looking to drive down the costs of rail improvement works.”