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Government scraps Great Western rail franchise race

By Western Daily Press  |  Posted: February 01, 2013

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

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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.

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  • a1rhella1r  |  February 05 2013, 12:19PM

    Agree entirely with rogerh3. The best thing that can happen is that talks fail. FGW are completely unfit for purpose. They didn't like it much when I asked why their CEO Tim O'Toole lied: "We believe we are best placed to manage these projects and capture the benefits through a longer-term franchise." Directly Operated Railways - http://tinyurl.com/afxur3m - are doing a good job with EastCoast. I believe that WestCoast is still in the hands of Virgin Rail - http://tinyurl.com/9rul7dq - for the next 9 -13 months.

  • PeterL  |  February 04 2013, 12:36PM

    The underlying problem is something that arose in the Thatcher years where money ruled and everything was seen in financial terms. This pertained through the Blair's time too and is still prevalent in government circles. There should be a clear distinction between Business and Service. Governments, left and right, have sold off our services and allowed them to become businesses. Businesses can go bust, services mustn't. The rail system is working, it is very expensive and it is not user friendly. I saw a young mum with toddler and bicycle barred from boarding a crowded train because she hadn't booked the bike. People don't come first anymore. Maybe this Rail fiasco is a warning to us about what might happen to the NHS. Peter Lansdown Secretary South Somerset Green Party

  • BV_BV  |  February 02 2013, 9:38AM

    The government may be begging FGW to carry on its two year franchise deal, but would FGW be looked at favourably when a new tender is offered? FGW have already used a break clause so would you want to do business with a company if you felt they had already cheated you? FGW may have the upper hand in this "battle" but I would hope they would look at the longer term "war" and play fair.

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  • Chappers  |  February 01 2013, 9:49PM

    What an absolute shambles. One day somebody might realise that private sector dogma has created a disjointed and disfunctional rail system that wastes huge amounts of ££££'s on pointless bureaucracy and lawyers. Re-nationalise, give us adequate carriages with decent space, hold connecting trains and... run a F ing railway!

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  • MoeXXX  |  February 01 2013, 6:53PM

    When I saw this headline I though great - they'll be nationalising it then - but no, instead we get this: "Ministers will now beg the firm to accept a new two-year contract from then." First is being granted a guaranteed two-year monopoly on its own terms. Wonderful :-(

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  • Imp-Act  |  February 01 2013, 4:49PM

    Why is this? Two words ..... Back handers!

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  • rogerh3  |  February 01 2013, 4:03PM

    Compensation isn't really an issue. All that's necessary is not to re-let the franchises when they end. Both the East Coast and West Coast lines are now back in state control; the Great Western franchise ends this year, Thameside in May, Thameslink in September and Southern, Southeastern and C2C soon after. While I certainly wouldn't defend Labour's handling I'm not sure they made things any worse - they did at least renationalise Railtrack (without compensation). Not that they had much choice.

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  • nickthompson  |  February 01 2013, 2:51PM

    highspeeder: What is said at a conference,and what is a manifesto commitment are two very different things.

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  • highspeeder  |  February 01 2013, 12:39PM

    Rogerh3 The notion you mentioned " ANY prospective government who included in their manifesto that ALL public transport would be returned to our ownership without compensation would win an election hands down" has already be done. I can remember the speech by Two Jags Prescott at a Labour Party Conference stating exactly this prior to Labour's re-election all those years ago as if it was yesterday. What did they do? They went back on their word and made the whole franchised railway worse under their tenure.

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  • nickthompson  |  February 01 2013, 10:11AM

    rogerh3: Could not agree more, I,like millions of other tax payers are fed up to the back teeth with governments of both colours handing out millions of pounds (of our hard earned cash) to these PRIVATE rail companys when the vast majority of us cannot afford to travel by train,ANY prospective government who included in their manifesto that ALL public transport would be returned to our ownership without compensation would win an election hands down,they have robbed us long enough,I know of no other private company that gets government handouts.

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