Latest Rail News

04.10.13

First Great Western extension premium revealed

FirstGroup will only pay £32.5m in premiums to the Government for the extended First Great Western (FGW) franchise announced yesterday, it has been reported

The figure was left out of the DfT’s official announcement, a move criticised by many in the industry. 

The current FGW franchise is due to expire on October 12, and will now run until 2015. Transport secretary Patrick McLoughlin said the deal would provide “real benefits”, with FirstGroup committed to a range of works including the new Reading rail depot and introducing new Intercity Express trains on the route. 

The extension is part of the Rail Franchise Strategy set out earlier this year. 

Labour condemned the agreed price of the contract. Maria Eagle, shadow transport secretary, said: “Despite First Great Western paying £126m last year, they will only have to return £17m next year because incompetent ministers have negotiated such a poor deal for taxpayers. Together with the equally poor deal that ministers secured to extend Virgin’s West Coast contract, tax-payers will lose out on a staggering £173m in franchise payments next year. 

“Instead of lining the pockets of private train operators, that money could have been used to ease the pressure on commuters facing eye-watering annual fare rises of as much as 11%. 

“It is a scandal that the only reason for these costly contract extensions is David Cameron’s decision to rig the franchising timetable so that he can carry out a totally unnecessary privatisation of East Coast rail services.” 

But FirstGroup’s Tim O’Toole said: “The agreement with the Department for Transport is good news for First Great Western passengers, taxpayers and our shareholders as it provides continuity and consistency, building on the improvements our experienced team has already made over the last franchise period. 

“We have seen significant improvements in customer satisfaction and punctuality, and working with the Department for Transport we have delivered additional capacity on the busiest morning peak trains.

“We will work closely with stakeholders and partners along the route to explore further ways to support our local communities. As the UK's largest and most experienced rail operator we remain committed to maintaining a leading position in the market, and look forward to the rail re-franchising programme gathering pace in the coming months.” 

Welsh secretary David Jones said: “The assurance of improved services, such as the roll out of wi-fi, will be warmly welcomed.” 

Just 48% of passengers thought that FGW provided good value for money, research by Passenger Focus found. Anthony Smith, chief executive of Passenger Focus, said: “We know that, for most passengers, the key thing is that trains keep running, turn up on time, and that they are able to get a seat. 

“They will welcome the certainty and stability this extension to the Great Western franchise will bring but may be disappointed that they have to wait longer for the investment that will accompany the longer franchise when it is finally awarded. 

“It is important that this short-term extension is used to prepare and deliver a better, more passenger-focused franchise where the passenger voice has been heard and taken into account.” 

The unions also spoke out against the deal, and called it “a scandal” that DOR was not considered to run the franchise. 

General secretary of the RMT, Bob Crow, said: “This is another twist of the rail franchising racket with a company running one of the worst performing services in the country given a free run to milk this vital inter city line for all it is worth for another two years.” 

Manuel Cortes, leader of the TSSA, added: “FGW are being rewarded for failure on a massive scale.” 

Tell us what you think – have your say below, or email us directly at opinion@railtechnologymagazine.com

Comments

Nonsuchmike   04/10/2013 at 15:06

Well, surprise, surprise, Cameron's big City friends are getting a Davey Bonus to pass among themselves and their shareholders. 32 million for two plus years sound terrific business sense to me, especially as they paid 126 mill for just one year last year. But then what do I know about running a railway? Seems strange that Great Northern can do a far better job out of the private sector when they do not have so many palms to grease. Perhaps we can learn something from that.

Diapasontraveller   04/10/2013 at 15:25

I think FGW deserve to keep this franchise - after all what right minded accountant would want the mixed blessings of Network Rail, Cross-Rail, IEP, Electrification and all the hassles with what is involved. However you must keep those who try so hard such as Hopwood and his team away from the political masters of First Group management, etc. I think the extra standard class seats from first on the 166s [16 seats x 21 sets] will not cover the loss of at least 8 seats from each toilet area [16 on a 166, 8 on 165] with the previously announced C6 overhauls and fitting of disabled persons compliant toilets which work is due to start shortly - that is a loss of 16 seats on 166 = no seat gain, and 8 seats x 36 sets 165 class - the first should be removed entirely from the 165's. What influence has this decision been affected - if only subconsciously by the long running series on Channel 5 Television - I cannot think of any other line that has such general public coverage on "my problems/my good works" in the period leading up to franchise announcement.

Bemused Railwatcher   07/10/2013 at 09:28

I can only wonder about how these events have unfolded in favour of First. They handed back the franchise 2 years early thus avoiding £800m payment to DaFT but putting their prospects of winning the franchise in jeopardy. Then the West Coast franchise debacle resulted in the cancellation of the Western franchise contest (and compensation of £40m being paid by DaFT to the bidders). This left DaFT in a desparate position which First have clearly exploited to accept this franchise extension at a ludicrously cheap price - more money lost to the railway purse. Regardless of what you might think about the merits (or otherwise) of privatisation, this is no way to run a business. You can't really blame First - they are not accountable to the taxpayer/farepayer but to their shareholders. Either Sir Humphrey (or more likely the succession of Ministers who have screwed up this entire process) should be sacked, or else the entire regime for managing the railway needs a complete overhaul.

Railrunner   18/10/2013 at 22:39

Bemused, First did not hand the franchise back two years early. They decided not to take up the OPTIONAL two year extension. That option was provided by the DFT because of the uncertainty of the GWML modernisation. The Govt. were very relieved when the option was not taken up because the disruption payments by the DfT to FGW would have dwarfed the £793m payable if the option had been taken up.

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