SERIOUS concerns have been raised about the 'shambolic' way train building contracts are awarded after MPs warned taxpayers would bear the risk of two multi billion-pound deals.

The Department for Transport (DfT) decided to take charge of the purchase of new trains for the Intercity Express programme (IEP) – which will be made by Hitachi at its soon-to-open Newton Aycliffe factory - and for the Thameslink project "despite having no previous experience of doing so," the House of Commons Public Accounts Committee said.

Mick Cash, general secretary of the RMT transport union labelled the system of train procurement in Britain as "an expensive shambles."

The Committee report went on: "By buying the trains directly, the department has taken on the risk of passenger demand forecasts being wrong.

"If demand proves to be lower than forecast, taxpayers would have to cover the costs of any financial shortfall."

The report continued: "These two major projects also demonstrate yet again that the department has limited capacity and capability to manage large-scale procurements, and that it remains overly reliant on consultants."

A Hitachi-led consortium is supplying 866 new carriages for the Intercity Express programme, which will start to replace old trains on the Great Western and East Coast lines from 2016.

German company Siemens is supplying 1,140 new Thameslink coaches to provide improved capacity on cross-London rail routes. The combined cost of the two contracts is around £10.5bn.

The Committee welcomed Hitachi’s commitment to invest £82m in County Durham so that trains are assembled in the North-East and jobs supported in the UK supply chain. However, it voiced dismay that Siemens will not be manufacturing the 1,140 new Thameslink carriages in the UK.

The report also said that the DfT began the procurement of the Intercity Express trains "without a clear idea of how many trains would be needed, which routes they would run on and what form of power would be required".

The committee added that it was disappointed that Siemens would not be manufacturing the Thameslink carriages in the UK.

The committee's chairman, Margaret Hodge, said: "The department decision to buy the new trains itself has left the taxpayer bearing all the risk.

"The department has no previous experience of running a procurement of this kind, let alone two with a combined value of £10.5bn. Yet it has chosen to break with its previous approach of leaving it to rolling stock companies and train operators to buy trains, transferring risk away from the rail industry back to government."

She went on: "The only way the department can limit this risk is by requiring train operating companies to use these new trains to run their services regardless of whether they best fit the services they would like to offer."

Mr Cash, added: "Train procurement in Britain is an expensive shambles locked into the fragmentation and profiteering that has been lumped on to the taxpayer through two decades of privatisation.

"The companies using these trains get to privatise the profits while the public get to shoulder over £10bn of risks. It is an absolute disgrace."