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Rail Franchising

Volume 549: debated on Monday 3 September 2012

On 15 August 2012 the Department for Transport announced to the London stock exchange that it intended to award the intercity west coast franchise to First West Coast Limited, a subsidiary of First Group.

Bids were received from Abellio InterCity West Coast Limited—NV Nederlandse Spoorwegen; First West Coast Limited—FirstGroup plc; Keolis/SNCF West Coast Limited—Keolis SA and SNCF; and Virgin Trains Limited—Virgin Group Holdings Limited.

The new franchise is planned to begin operation on Sunday 9 December 2012. The franchise will operate for a core term of 13 years and four months, with an option to be extended to operate for up to 15 years. The winning bid from First West Coast Limited provides for a premium of £5.5 billion net present value (NPV) over the core franchise term.

The west coast main line is one of the most important intercity rail passenger routes in the country and it is also a valuable public asset. Over the last decade and more, taxpayers have invested £9 billion to upgrade the infrastructure. It is a profitable franchise for the current operator and after significant public investment in the line the Government are rightly seeking to get a substantial return for passengers and taxpayers.

The First West Coast bid provides: more trains on the route, with 12,000 extra seats per day provided by 11 new six-carriage electric trains from December 2016 (in addition to the 106 extra Pendolino carriages currently being introduced); refurbishing the existing Pendolino and Voyager train fleets, more capacity on services between Birmingham and Scotland, and faster journey times between London Euston and Glasgow; new services to Blackpool, Bolton and Shrewsbury, subject to approval of the Office of Rail Regulation (ORR); lower standard anytime fares over the first two years; £22 million in station improvements; Oyster-style smart ticketing; and, for the first time in an intercity franchise, better customer satisfaction as measured by the national passenger survey.

When a new franchise begins, employees of the current franchise operator, including drivers, guards and back-office staff will be transferred to the new operator, protected by TUPE regulations. All of the rolling stock used by the incumbent operator will also transfer across.

Taken together, I believe that the commitments in First West Coast’s bid represent significant improvements for passengers and will provide a good return for the taxpayer.

As a result of a legal challenge, which the Government intend to defend robustly, we have not yet signed the contract with First West Coast, and consequently the competition remains live. I cannot give the full commercial details of the winning bid, or indeed of the other bids. Nor is it usual or appropriate—once litigation proceedings have commenced—for the Government to comment on the detail of that, other than to say that our legal advisers are fully engaged in addressing and responding to those proceedings.

I will continue to keep the House updated, subject to the constraints of legal or commercial privilege.