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Thursday 21 June, 2007

Dept. For Transport

West Midlands Franchise

Department For Transport
21 June 2007

Stock Market statement

For immediate release: 07.00 21 June 2007


New trains and more services for the Midlands

THE DEPARTMENT FOR TRANSPORT today announced that London and Birmingham Railway
Ltd (a subsidiary of Govia) has been awarded the contract to run the West
Midlands franchise.

The new franchise will begin on 11th November 2007 and will run until 19th
September 2015. The DfT has the right to terminate the franchise after six years
if the operator is failing to meet agreed performance targets.

The franchise will deliver increased capacity, better performance and the
rollout of smartcard technology by 2010.

 The West Midlands franchise combines the current Silverlink County services
between London Euston and Northampton with the West Midlands local and regional
service groups of Central Trains. The Department will pay a subsidy of £1,127m
(NPV) over the franchise of seven years and 10 months.

Benefits for passengers from the franchise include:

-    New services, including a new semi-fast service between London and
     Crewe, serving the Trent Valley, and two trains an hour all day between
     Birmingham and Liverpool and Birmingham and Northampton from December 2008 
     on the completion of the West Coast Main Line modernisation

-    A fleet of 37 new electric Desiro trains by July 2009

-    New class 172 diesel trains to replace the existing class 150 DMUs
     operating on the Snow Hill line services in the Birmingham area by July 

-    £11.5m investment in stations

-    1033 more car parking spaces

-    Forecast 90.7% punctuality and reliability by the end of the franchise.

The Government will continue to limit annual rises of regulated fares in line
with national policy, which is currently RPI+1%.

As with all franchises, unregulated fares will be the responsibility of the
operator. In the West Midlands, London and Birmingham Railway Ltd is expected to
increase fares for journeys on the London to Northampton route by 3% above
inflation per annum. Average rises on all other routes within the franchise
including those in the West Midlands conurbation are expected to be no higher
than RPI+1%.

Passengers in the franchise area will benefit from new arrangements to be
compensated for delays and poor performance.


Notes to Editors:

1. The subsidy profile for the West Midlands franchise is:

Mar-08    Mar-09   Mar-10   Mar-11   Mar-12   Mar-13   Mar-14   Mar-15   Mar-16
78,285*   202,534  200,602  184,992  175,148  169,917  165,824  154,767  67,146*

(Nominal, £000s, part years indicated with an asterisk)

2. The bidders for the West Midlands franchise were London & Birmingham Railway
Limited (Govia); Serco NedRailways West Midlands Limited (a joint venture
between Serco and NedRailways). MTR Corporation UK Limited (MTR Corporation of
Hong Kong) pre-qualified for the competition but declined to bid.

3. The new passenger refund system, Delay/Repay, will compensate season ticket
holders for delays to journeys they have actually taken, not on the basis of
overall performance. This is the same compensation system as currently operates
for single, return and weekly ticket holders. Refunds will be on the basis of
the proportional daily cost of season tickets, with a 50% single refund for
delays of 30-59 minutes, 100% single refund for delays of 60-119 minutes, and
100% return refund for delays of 120 minutes+. This system will be rolled out
nationally during the term of each new franchise

4. A proposal from the operators of the Chiltern franchise to run services to
and from Birmingham Snow Hill station was unsuccessful and these services will
be included within the West Midlands franchise.

5. More details are available on the Department for Transport website at

                      This information is provided by RNS
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