'Fears grow for future of rail expansion' - from the Guardian, 10 May 2009

[whole diary]

[Chris from Nailsea]

Shortfall of ^238m if First Group ditches franchise

The government's railway budget is threatening to unravel amid crisis talks over franchises and the revelation that First Great Western can walk away from a 10-year deal without footing the entire ^1.1bn bill.

The franchise system, where train operators pay the government to run services on certain routes, is under mounting financial pressure after National Express confirmed it was holding urgent talks about its ^1.4bn contract. Stagecoach is also in dispute with ministers about the terms of its ^1.2bn South West Trains deal, as operators struggle to meet demanding payment schedules amid faltering ticket sales.

First Group's First Great Western contract is worth ^1.1bn to the government but the majority of the payments - ^826.6m - will fall due only if FGW^▸ (First Great Western) accepts a three-year extension to the deal, taking it to 10 years in length. There is widespread industry speculation that First Group will avoid the ^826.6m bill by ending the contract in 2013, after the first seven years. The Department for Transport confirmed that FGW can avoid paying the full ^1.1bn.

"The FGW franchise is a seven-year franchise which will finish in March 2013. It contains a clause allowing the franchisee to extend their contract for three years, to March 2016," said a DfT^» (Department for Transport - about) spokesman.

For the full article, see http://www.guardian.co.uk/business/2009/may/10/first-group-rail-expansion-budget

[Timmer]

This was raised as something that could possibly happen when the franchise was awarded to First back in 2006. However, if they did then I'm sure they could forget being awarded a new franchise for a very long time.

With a number of TOCs^▸ (Train Operating Company) talking to the government about their franchises at the moment, you do begin to wonder if we are about to witness the beginning of the end of this current way of running Britain's railways.

[Btline]

If FG hand the keys in, who will pick them up? Virgin? Arriva? Govia?

[r james]

I suspect it wont be arriva,as they would be the only franchise operating in the whole of south wales then. 

Worst still... we might see some HSTs^▸ (High Speed Train) swapped with XC^▸ (Cross Country Trains (franchise)) for voyagers!! 

[devon_metro]

First Group own a number of the HST^▸ (High Speed Train) sets too. That might be interesting 

[vacman]

If FG hand the keys in, who will pick them up? Virgin? Arriva? Govia?

It will be tendered out again so we couldn't possibly even guess who would get it, arriva may get it, so what if they own everything in S.Wales, NX have everything in the East!!!!

[Mookiemoo]

ok - slightly off and on topic

Is the FGW^▸ (First Great Western) problem the fact that they offer local and stopping services in the same area.

I think of Virgin

Their WCML^▸ (West Coast Main Line) is stictly intercity - london midland offer the intermediate trains and london overground the true stoppers

I suspect although I do not know for certain the same may be true in other areas.

If the problem the same train company is trying to do two things at the same time

Maybe mergin thames and FGW was not a good idea - however they did need to srot out the route overlap issue (howevr I do remember when it was thames trains - if you got a turbo on a thames route up the cotwolds line, it was always a 166)

[IndustryInsider]

Is the FGW^▸ (First Great Western) problem the fact that they offer local and stopping services in the same area.

I think of Virgin

Their WCML^▸ (West Coast Main Line) is stictly intercity - london midland offer the intermediate trains and london overground the true stoppers

Not sure what FGW problem you're referring to, but if it's the problem with the franchise commitment then, no. The problem is that FGW overbid badly for the franchise assuming that the economy wouldn't go tits-up. The greedy Government saw lots of money flooding back into their coffers. A similar thing happened at NXEA^▸ (National Express East Anglia). Nobody has actually handed back any keys. Nobody is saying that First Group would be breaching the agreement if they don't take the extra three years. As for services offered, take a look at how Virgin and LM^▸ (London Midland - recent franchise) have tumbled down the punctuality tables over the last years.

[Mookiemoo]

Is the FGW^▸ (First Great Western) problem the fact that they offer local and stopping services in the same area.

I think of Virgin

Their WCML^▸ (West Coast Main Line) is stictly intercity - london midland offer the intermediate trains and london overground the true stoppers

Not sure what FGW problem you're referring to, but if it's the problem with the franchise commitment then, no. The problem is that FGW overbid badly for the franchise assuming that the economy wouldn't go tits-up. The greedy Government saw lots of money flooding back into their coffers. A similar thing happened at NXEA^▸ (National Express East Anglia). Nobody has actually handed back any keys. Nobody is saying that First Group would be breaching the agreement if they don't take the extra three years. As for services offered, take a look at how Virgin and LM^▸ (London Midland - recent franchise) have tumbled down the punctuality tables over the last years.

Im just thinking about the on going conflict between long distance requirements and peak commuters and the fact that FGW have high capacity on long distance HST^▸ (High Speed Train) services that can then morph to commuters closer to london

It seems - from my perspective - they do OK on both but neither really well

Lng distance and commuter servicesz are to totally different beasts

[IndustryInsider]

That's just the nature of the route. Having a hugely busy junction station so near London in Reading means the majority of long distance trains have to stop there. And the number of people who commute from Reading (or whom change onto a London train at Reading) is largely the reason the HST^▸ (High Speed Train)'s needed the extra seats in the first place.

To use your example of London Midland though, I think If you ask the commuters of Northampton, Berkhampstead, Hemel and the like what they think of their current service, they'd much prefer the current level of LTV^▸ (London [and] Thames Valley) performance from FGW^▸ (First Great Western).

[Timmer]

First Group own a number of the HST^▸ (High Speed Train) sets too. That might be interesting 

That may prove to be a vital bargaining chip when it comes to First offering Dft them running the franchise on a management contract basis for the last three years as without those HSTs there won't be enough stock to run the entire franchise without them as SET^▸ (Super Express Train (now IET)) won't be ready by 2013.

[r james]

Im sure its been explained before.. but when the IEP^▸ (Intercity Express Program / Project.) sets are ordered for the Great Western route, will there be suffucient to replace every single HST^▸ (High Speed Train)... or will it only be to replace the HSTs whihch First rent, not incluyding the ones they purchased?

[Tim]

[ The problem is that FGW^▸ (First Great Western) overbid badly for the franchise assuming that the economy wouldn't go tits-up. The greedy Government saw lots of money flooding back into their coffers.

True (and even more true wrt some other TOCS).  But I don't see what the solution is.  The Government could refuse to accept "overbids" but all that that would mean is that the tax payer gets a worse deal (effectively tax payers money would be used to bribe the TOCs^▸ (Train Operating Company) to stay in the game). 
 

[Chris from Nailsea]

The solution, according to the Socialist Party, is re-nationalisation: see http://www.socialistparty.org.uk/articles/7280

[devon_metro]

well they would say that wouldn't they!!!