Vital West country rail services are “in limbo” today after the Government scrapped the competition for the 15-year Great Western franchise.
Existing train operator First Great Western has had its contract to run inter-city services from London to Penzance – as well as South West branch-lines – extended from April until October.
Ministers will now beg the firm to accept a new two-year contract from then. The negotiations are embarrassing for the Government as FGW had exercised a break-clause to quit the deal three years early, saving a reported £800 million in payments, which paved the way for the now aborted four-way franchise run-off.
Today’s chaos has emerged from the fall-out of the flawed awarding of the West Coast Main Line franchise, and the short-term fix will raise fears about over-crowding, higher fares and punctuality.
The Department for Transport said longer-term proposals for the Great Western line will be set out in the spring. If talks with FGW fail, the line will effectively be returned to state control under the Government’s Directly Operated Railways vehicle.
The two-year contract offered to FGW flies in the face of the coalition’s flagship rail reform, offering firms longer 15-year rail deals to squeeze out more investment in the rail and rolling stock.
FGW is now in the driving seat. Train companies pocket fares, and in return pay the state for the privilege of running services. But FGW is in the position to charge at best a peppercorn rent, rail experts say, leaving the taxpayer to under-write maintenance and improvements to services. Whitehall officials refused to divulge details of talks.
Chris Irwin, chairman of TravelWatch South West, said: “The risk of this situation is that far from the Government taking money from the operator in franchise payments we will end up paying the operator to do the job. That money has to come from somewhere. It will certainly mean further pressure on rail spending that could mean more overcrowding.”
FGW parent company First Group said it would “continue to deliver improvements for passengers” if the two-year extension was agreed, including electric trains as far west as Bristol and improvements to signalling and stations.
The problems stem from the Government telling First Group it had beaten Virgin Trains to the £5 billion West Coast Main Line franchise – only for the decision to be scrapped after the discovery of “significant technical flaws”. Following an investigation into rail franchising, three franchise competitions – including Great Western – have been re-started.
Vital to tourists and business travellers, the Great Western contract includes Cornwall, Devon and Somerset mainline trains to London Paddington, and suburban and rural commuter services. Cross Country and South West Trains to the region are separate deals.
The franchise had promised a range of improvements, including a new early morning service from Plymouth to London, a possible “Devon Metro” linking Exeter to surrounding towns and the prospect of a new service every 30 minutes from Penzance to Plymouth or Exeter as a replacement for losing the three direct trains.
Labour said yesterday’s decisions would drive the cost of the West Coast fiasco up well beyond the current estimate of £48 million. Unions accused Transport Secretary Patrick McLoughlin of taking a “sticking plaster” approach to a privatised system which should now be ditched.
Meanwhile, Mr McLoughlin risked angering rail operators by announcing that he would not pay compensation to any of the companies involved in the disrupted franchise competitions. Those shortlisted for the Great Western franchise were FirstGroup, National Express, Stagecoach, and Arriva.
The DfT is expected to wait until the spring before making clear whether it intends to invite fresh bids for the Great Western service.