Commercial Case

Output based specification

The initial output from the WLR project will be:

  1. The construction of a new rail link in Windsor enabling 4 trains per hour in each direction between Slough and Staines (plus onward travel as timetables allow). This will be enabled and part-funded by the SPV below. It will however be an independent operation to maintain compliance with EU law.
  2. An SPV for the purpose of re-purposing and gaining best value sensitive to local wishes any land freed by the new railway alignment together with any neighbouring land as agreed in partnership, Network Rail, the local council and other stakeholders.
  3. The construction of a new rail link from Heathrow to the west that satisfies the High Level Output Specification (HLOS) set by the DfT in July 2012.
  4. If point one is successful, further projects to connect or to reconnect other missing links in the national rail network, make better use of transport assets and provide better transport links

Procurement Strategy

The procurement strategy will be to obtain best value for shareholder money and, where appropriate, public money or assets (consistent with EU law).

As much as possible of the project will be competed. The proposed strategy is once a joint venture structure or partnership (SPV) is agreed between WLR and Network Rail the next stage will be to invite the involvement of initial investors by competition, for the purpose of drawing up more detailed plans, for consultation with the council and other stakeholders. This competition will be overseen and run by Turner & Townsend to ensure fairness and to give professional advice to the SPV.

If plans are agreed an open tender will be conducted for the actual construction work.

Notes

Using a private sector vehicle to bring forward the project leaves much less risk with the taxpayer than is usual for infrastructure projects. The more common model is for the taxpayer to bring forward proposals but for these only to be tendered in parts, such as construction or detailed planning. The overall project risk usually stays with the taxpayer. In this project it is proposed that the project risk is with the private investors, which will create an incentive to reduce costs and improve revenue through innovation.

The initial private sector investment will be secured against an agreement with Network Rail not to use its land for other purposes or to give the project to a third party. However, if for any reason the project does not proceed the land would revert to Network Rail, who would also have priority call on profits generated if the project is a success.

Although this model has never been used before for a large infrastructure project, it has been used by Network Rail for property projects, which is how the initial stage of this project is also structured. There is also a developed market for this type of property structure, with the rail contribution being no different in principle to Section 106 payments or other planning work that a developer would need to conduct to win approval. There can therefore be some confidence that this will work in practice and be compliant with EU law.

Local MPs

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