Strategic Rail Authority
7 March 2002
7 March 2002
SRA Agrees Terms for Restructuring of Central Trains and ScotRail
The Strategic Rail Authority (SRA) has agreed terms with National Express Group
for changes to the franchises they operate, which will secure their future
stability and bring benefits to passengers. In particular, the deal provides
for the financial restructuring and future development of the heavily subsidised
but loss making ScotRail and Central Trains franchises for the remaining two
years of those franchises.
For passengers, the deal secures the future of ScotRail and Central Trains
services. In addition, it ensures that passengers will continue to benefit from
the protection of all of those additional services, which exceed the minimum
level required in the Franchise Agreements, for the duration of the franchises.
These additional service commitments mean that over three million additional
train miles will be guaranteed on the Central Trains and ScotRail franchises.
The deal also secures current levels of rolling stock for the remaining life of
The SRA is to receive a cash payment of £59 million from National Express in
return for a revised franchise payment profile on these two major regional
networks. In securing this financial restructuring, the SRA has maintained the
transfer of cost and revenue risk to the operator, except on those services
provided to the specification of the West Midlands and Strathclyde Passenger
Transport Executives, where revenue risk continues to lie with the PTEs. This
will ensure that the operator continues to be incentivised to improve services
to passengers, whilst ensuring that SRA and taxpayer interests are protected.
The deal will provide £115 million of additional subsidy across both franchises
until their expiry in 2004. It includes clawback provisions to ensure that,
where financial results are better than forecast, a share of the profits reverts
to the SRA.
Both parties have also reached agreement on a range of outstanding issues
arising from the National Express take-over of the franchising businesses of
Prism Rail PLC in September 2000.
In reaching this settlement with National Express, the SRA has completed the
financial restructuring of all regional franchises at the outset of the
franchise replacement process. The settlement will provide a firm foundation
from which the franchises can run to term, and then be extended or replaced in
an orderly market process.
SRA Chairman Richard Bowker said:
'It has long been clear that the financial basis for the regional franchises was
unworkable - a situation compounded by Hatfield and the foot and mouth outbreak,
which affected tourism revenue. The SRA and National Express have worked
together over the last six months to hammer out the right solution for this
problem. Negotiations have been rigorous on both sides. I am convinced that
the outcome is a great step forward for passengers, the SRA and the operators.
There is now a firm basis on which to plan for the future development of the
franchises before they are re let, or extended, on expiry in 2004, in line with
the objectives of our Strategic Plan.'
Notes to Editors
1. Central Trains operates an extensive network of rural, urban and inter-
urban services right across the Midlands, as well as into Central and South
Wales and East Anglia. In the West Midlands local services are supported by
Centro (West Midlands PTE). The Central Trains franchise expires in April 2004
and the SRA has indicated that National Express negotiation of a two-year
extension may be appropriate for the franchise.
2. ScotRail operates the vast majority of the passenger rail services in
Scotland, and its services extend across the border to Carlisle. It also
provides certain through services between Stranraer and Newcastle, and the
Sleeper services between London Euston and Glasgow, Edinburgh, Inverness,
Aberdeen and Fort William. In the Glasgow area, ScotRail operates passenger
rail services on behalf of Strathclyde PTE (SPT). The ScotRail franchise
expires in April 2004.
3. The ScotRail franchise is funded by the Scottish Executive, which is
also responsible for providing Directions on the future extension or replacement
of the franchise.
4. In addition to the agreement on ScotRail and Central Trains, the SRA and
National Express have agreed the following issues relating to the rail
businesses that National Express acquired from Prism in September 2000:
• National Express will continue to operate the West Anglia Great Northern
franchise until March 2004;
• National Express will continue to operate the Wales & Borders and Wessex
franchises until 1 April 2004 but the SRA intends to re-let these
franchises before this deadline;
• To fulfil the undertaking inherited from Prism to invest £20.5million
in the c2c franchise, National Express will invest £8 million in total
on capital improvements on the c2c and West Anglia Great Northern
• To fulfil the outstanding £13.3 million of the £25 million that National
Express undertook to invest across its franchises as part of the Prism
acquisition, National Express will pay the SRA £3.5 million in cash.
SRA Press Office: 020 7654 6387/6234/6339/6294
National Express: William Rollason, Finance Director or Nicola Marsden,
Director of Group Communications: 020 7529 2000
Financial Dynamics: Andrew Dowler / Ben Foster: 020 7831 3113
This information is provided by RNS
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