Laing Rail secures £80million investment for rail industry

December 20th 2004

Secretary of State for Transport Alistair Darling today joined Laing Rail to announce that a major new deal worth £80-million has been agreed for the Chiltern Railways line. It is the first time this form of private capital has been used to fund major infrastructure work in the rail industry.

The contract has been awarded to Carillion and construction work is scheduled to start next summer. The project, known as Evergreen II, involves the upgrade of railway infrastructure which will enable Chiltern Railways to run more trains, reduce knock-on delays and increase reliability of services. It involves the construction of two new platforms at Marylebone station and additional signalling.

For this project Laing Rail is pioneering the application of Design Build Finance & Transfer (DBFT) within the UK rail industry. This is a new way of conducting business and will ensure better value for money. In effect the private sector is investing in rail infrastructure, allowing the efficient use of private capital. Looking to the future, this means there will be an effective and value for money mechanism of securing investment in the rail industry.

Adrian Shooter, Laing Rail’s Managing Director, said, “This shows the benefit of effective teamwork - by working together we have secured a major investment for the railways. This is the first time DBFT has been used successfully in the rail industry and demonstrates how the private and public sector can work together to develop innovative solutions. This new method lays the foundation for the efficient use of private capital for the benefit of the rail industry in the future.”

Alistair Darling, Secretary of State for Transport, said, "Passengers will really see the benefit from this huge project - the frequency of trains will increase and reliability will improve further. It is encouraging to see a new method of financing being put into practice, which results directly in enhanced services for those people using the railway."

Laing Rail developed the scheme in conjunction with the Strategic Rail Authority (SRA) and Network Rail (the infrastructure owner), and in consultation with the Office of Rail Regulation. It is the first time a Special Purpose Company (SPC) has been used successfully for major track and signalling works. Carillion Construction Limited will carry out the works supported by a bank facility provided by Sumitomo Mitsui Banking Corporation Europe Limited. Financial close with Carillion was reached six weeks after appointing them as preferred bidder.

The work is planned for completion in time for the introduction of the December 2006 timetable and will consist of:

• Two additional platforms constructed at Marylebone station: the station is nearly at full capacity - this expansion will enable further growth and allow Chiltern Railways to meet the continuing increase in demand for its services. 
• More signals between Bicester and High Wycombe (27 miles), between Princes Risborough and Aylesbury, and in the Neasden area: this will allow more trains to run on these stretches of track, as well as enable Chiltern Railways to recover faster from delays and so improve punctuality
• Straightening the tracks at Beaconsfield: this will allow trains to run faster by raising the speed of the line.

Once complete, reliability and punctuality on the line will improve still further (it is already one of the best in the country) and allow Chiltern Railways to offer passengers a more robust service.

This is the second phase of major infrastructure work on the Chiltern Railways route - Evergreen I was completed in 2002 on time and on budget - and is part of a £370million investment programme announced when Chiltern Railways was awarded its 20 year franchise in 2002.

Cath Proctor, Chiltern Railways’ Managing Director, said, “This represents a significant investment in the Chiltern route and is a positive example of the rail industry working effectively together to deliver tangible long term benefits to passengers.

“Aside from safety, having trains that run on time is our utmost priority. We are already one of the most punctual train operators in the country, but more can be done. This project will help us provide our passengers with a more robust, reliable service by speeding up the line, improving signalling and increasing capacity at Marylebone.”

Award winning operator Chiltern Railways is one of the best train operators in the country, officially the most reliable and punctual in the region over the past year and consistently voted top for passenger satisfaction. Earlier this year it became the first train operator to double its fleet size since Britain’s railways were privatised. The rail company has initiated investments of well over £150 million in improving its route so far, including over £65 million on 61 brand new ‘Clubman’ coaches.

Paul Kirk, Carillion Transport’s Managing Director, said, “We are delighted to have been selected for this ground breaking contract and very much look forward to working with Laing Rail and Chiltern Railways to deliver a faster and more reliable train service for passengers using this route.”

Peter Henderson, Network Rail Director of Projects and Engineering, said: "I am delighted to see this substantial investment on the Chiltern line, enhancing capacity on the route to provide for future growth in rail travel. As the infrastructure owner, Network Rail will be working closely with industry partners to facilitate this project and ensure its successful delivery."

David Quarmby, Strategic Rail Authority Chairman, said, “Passengers will be the winners from this £80 million second phase of the Chiltern Evergreen projects. The investment represents an important milestone in the procurement of private sector delivered enhancements to the railway. It was driven by the SRA when it signed new franchise terms for Chiltern Railways in February 2002.”

Laing Rail has an impressive track record in consistent performance and the successful delivery of large-scale rail infrastructure projects. These include building a new £20million depot at Wembley, a £4million training facility and depot extension at Aylesbury (completed on time and under budget) and on-going works at Birmingham Moor Street station.

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