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Future ail franchises will run for a minimum of 10 years with the chance to extend them to up to 22 years, the government has said.

But train companies will also have to meet tougher performance criteria to avoid being stripped of a franchise.

And companies which walk away from a franchise because it is not profitable will face bigger financial penalties.

The move has been welcomed by the rail industry, which says it will give companies more incentive to invest.

Most rail franchises are currently let for seven or eight years.

The Association of Train Operating Companies (Atoc) has previously called for franchises to have a standard length of double that, arguing the three companies with the highest customer satisfaction and performance ratings all have franchises of at least 15 years.

The government has opted instead for a standard franchise length of 10 years with the option to extend it to more than 20 years.

Chiltern Railways has just had its 20 year franchise confirmed in return for extra investment between London and Birmingham.

Ministers say there will be tougher performance tests to go along with these longer franchises.

These will look at punctuality, delays and cancellations, and companies can lose their franchise if they do not perform well enough.

"Ten year franchises, with the possibility of longer contracts should bidders make sensible and affordable proposals, will allow operators to invest and suggest new innovations," said the Transport Secretary, Andrew Adonis.

"However, having longer franchises means that we will need to introduce tougher performance measures and more potential contract break points to ensure bad operators can be removed."

Company commitment

And after the problems with National Express when it gave up its East Coast franchise last year, the government says companies will also have to put up bigger deposits - called performance bonds.

That will make it more costly for them to walk away as the deposit will be lost. That part might not appeal to train companies since they will have to find more money up front.

National Express's problems came from having paid too much for the franchise. Recession saw passenger numbers drop and running the operation was no longer profitable.

To address this, the government is also proposing linking franchise payments to the economy.

If the economy is doing well, a company which pays for its franchise might see those payments increase. If there is a recession the payments could fall.

The industry has broadly welcomed the moves.

"Today's announcement marks a step change in the government's thinking on passenger rail," said Michael Roberts, chief executive of Atoc.

"Longer franchises would give train companies a greater stake in the railways, encouraging them to bring increasing amounts of private sector investment to the network at a time when public finances are stretched."

RAIL UNION RMT pledged today to make the continuing chaos of rail privatisation and the franchise system a major issue in the run up to the general election, warning Labour that their plans to extend franchises up to 22 years are ^electoral suicide which will alienate millions of passengers sick and tired of the disruption and fragmentation of the tax-payer sponsored rip-off on the rail network.^

RMT are warning that the moves to extend the length of franchises, confirmed by Transport Secretary Lord Adonis today, are designed to fatten-up private sector returns on the East Coast Main Line, which is due for retendering next year, and where two previous gambles on privatisation have collapsed into chaos.

RMT have also slammed the government for admitting that they have not carried out any value for money comparison on the alternative option of running rail services in the public sector. In a written response to RMT parliamentary group member David Drew MP, transport minister Chris Mole revealed that his department has made ^no assessment of the value for money of operating rail passenger services in the public sector.^

RMT General Secretary Bob Crow said:

^Despite all the talk about tougher contracts, today^s Government announcement on franchises is a complete capitulation to the train operating companies. Coming just days after the First Capital Connect commuter franchise went in to meltdown it is unbelievable that the Government would even consider shifting the goalposts even further in favour of the private companies.

^Rail privatisation has been a licence to print money. Fares and other charges have been jacked up ^ often by stealth ^ and over ^11 billion has been handed over in subsidies to the train operators in the past ten years while they have extracted profits of over ^2 billion since 1997.

^RMT will fight these rail franchise extension plans and we will make this a major issue in the run up to the general election. We will continue to fight for the safe and reliable alternative to this tax-payer sponsored rip off and that means public ownership of the entire rail network.^