[2025] UKUT 00138 (LC)

By early summer 2019, therefore, WWH is still producing sleepers, NR is still trying to get planning permission at Bescot, and the site at WWH is going to vest in the Secretary of State within the next 12 months. Even if planning permission was going to be granted for Bescot – and it was no doubt obvious to everyone that that was not a given, in light of local opposition – NR’s supply of sleepers was looking vulnerable because a new factory at Bescot was going to take two to four years to be built and get going.

So in September 2019 NR issued an ITT for a contract for the supply of sleepers, which the parties have referred to as P3. It was for a four-year term, potentially extendable by up to four single years (so a maximum term of eight years); the notice stated that the successful supplier would receive an initial order for 200,000 sleepers and thereafter 50,000 per annum “although this may increase to a range of 250,000 to 400,000 a year should unforeseen difficulty in supply arise.” No site was specified.

The claimant submitted two bids in November 2019. One was for supply from its site at Rochester. This was a small site, already producing some specialist sleepers. The bid was fully worked-up including all the details one would expect including the pricing of the two standard types of sleeper and the wide range of specialist sleepers, as well as price banding and so on. The other was a single page letter, signed by Mr Neil and sent without approval from the Cemex board. It was for supply from WWH; it offered significantly lower prices than the claimant had been charging in 2016 (before the increased prices under the contractual extensions) and lower prices than those contained in its P2 bid, and it listed only three types of sleeper. Mr Neil explained that the letter was “a sprat to catch a mackerel”; he wanted to open up a dialogue and raise the possibility that NR might decide that it still needed WWH and might therefore apply pressure for it to be reprieved from compulsory acquisition. We might describe the letter as a last minute plea for mercy written on behalf of a business that had nothing to lose. As Mr Neil put it, nothing more was heard of that bid.

Both bids were submitted in November 2019. In December 2019, planning permission for Bescot was refused. NR did not appeal that refusal. Mr Jarvis spoke eloquently of the sense of let-down and frustration experienced within NR; Bescot had been a project for several years, a lot of effort had gone into it, and all for nothing. The RailOne contract came to an end.

There remained for NR the immediate problem of supply, with the disappearance of the WWH factory now imminent. The claimant’s Rochester bid in response to the P3 invitation was successful, and the claimant is now manufacturing sleepers there under a four-year contract which we outline below.

The Rochester site is agreed by all concerned to be less than ideal. It is not at an LDC, and it is on the wrong side of London for supply to the west side of the country. Access to the main rail network is via the congested Hoo Junction. Vehicular access is very difficult (through a tunnel). It is too small; while its maximum capacity is a notional 400,000 sleepers per annum, it has insufficient storage capacity to operate comfortably at a production rate of over 200,000. Due to its size, it is a carousel plant, with machinery supplied by a Dutch company and specially adapted for the layout of the site. Installation of the plant commenced in June 2021 and commissioning was completed in April 2022. Low level production for testing purposes began in December 2021. The plant became fully operational in April 2022. It has yet to generate a profit.

It will be appreciated from what we have said that while NR has a dual source of sleeper supply at the moment, the future is uncertain. The TWM contract will expire in 2026 and therefore there will have to be a procurement exercise; TWM may or may not secure a new contract; any new manufacturer will need time to get going – hence, it is thought, the retention of a significant part of the stockpile. The Rochester contract can continue until 2030, but the factory has limited capacity which may become a problem when NR’s requirement recovers from its current low level; in any case the location of Rochester is so poor that one suspects almost any site to the west of London, whether or not at an LDC, would be preferable. So the future of the claimant’s business is hard to predict.