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Monday 08 May, 2000

Shadow StrategicRail

ReFranchise Replcmt Programme

Shadow Strategic Rail Authority
8 May 2000

SSRA Moves Toward High Speed Rail Route to the North

The Board of the Shadow Strategic Rail Authority received a progress report on
the franchise replacement programme when it met last week for the first time
at full strength, following the recent appointments by the Minister of
Transport, Lord Macdonald of Tradeston.

It endorsed the decision of its Chief Executive, Mike Grant (acting in his
role as Franchising Director) to inform the two contenders for a new East
Coast Main Line franchise (GNER, the incumbent, and a Virgin/Stagecoach joint
venture, Virgin East Coast) that he has concluded there looks to be a case for
developing  the concept of a new High Speed Line to link London and the  Home
Counties with major centres leading north to Scotland.

In its proposal for the new ECML franchise, Virgin East Coast  has put forward
such a line north from near Peterborough to a junction south of York.  Another
prospect put by others to the SSRA recently followed a route between that line
and the Pennines.  In consultation with Sir Alastair Morton, however, Mike
Grant has concluded that:

(a) further study is needed to establish the timing of and the best route for
such a line;

(b) the line once defined may or may not fit within the new ECML franchise now
under discussion; and

(c) the need to increase passenger and freight services 2001-10 to satisfy
rising traffic on the ECML must be given priority by the successful

(d) It is unlikely that a High Speed Line can be planned, approved, designed,
built and commissioned by 2010.

Accordingly, the Franchising Directors process to select the preferred
operator for the new ECML franchise is expected to be completed by July.  Both
contenders have been asked:

(a) to formulate their (probably different) thoughts for high speed
enhancements to the capacity of the ECML beyond 2010; and

(b) to commit, in the event of winning this franchise, to active participation
in an SSRA-led, Railtrack-supported study of the alternative prospects for a
High Speed Line to link London and the North early in the next decade.

 Commenting, Sir Alastair said today:  'There are capacity problems ahead on
the West Coast, Midland and East Coast Main Line franchises, so yet more
capacity north from London will be needed in the second decade of the new
century.  Upgrades can only take us so far; and high speed trains can
accelerate the growth of inter-city travel, relieving our congested trunk
roads and air routes'.  

Notes to Editors

1. The East Coast Main Line (ECML) carries a fast, frequent service linking
London Kings Cross with Peterborough, Yorkshire, Humberside, the North East of
England and Scotland. The service is currently operated by GNER Holdings
Limited (a subsidiary of Sea Containers Ltd) under a seven year franchise
which started in April 1996.

2. The West Coast Main Line (WCML) carries fast, frequent services between
Glasgow, north west of England, north Wales, the west Midlands and London
Euston. The inter-city service is operated by Virgin Rail Group Limited under
a 15 year franchise which started in March 1997.
3. The Midland Main Line (MML) operates high speed and Turbostar train
services along the M1 corridor between London, the east Midlands and South
Yorkshire.  The services currently operated by National Express Group PLC.
under a ten year franchise which started in April 1996.

4. The ECML franchise was included in the first batch of three of the shorter
term (7 year) franchises selected for franchise replacement negotiations by
the Franchising Director in November 1999.

5. GNER (the incumbent) and a Virgin/Stagecoach joint venture, Virgin East
Coast, were shortlisted to compete for the ECML franchise on 14 March 2000.
The deadline for best and final offers from the contenders will be late in

Important Notice

This news release is issued by the Franchising Director and its contents have
been approved for the purposes of section 57 of the Financial Services Act
1986 by KPMG Corporate Finance.

KPMG Corporate Finance is a division of KPMG which is authorised to carry on
investment business by the Institute of Chartered Accountants in England and
Wales. This news release has been prepared for general information purposes
only and is not intended to form the basis of any investment decision or
constitute an offer or invitation to bid for any passenger rail franchise or
to acquire shares in a train operating company. Neither this news release nor
any copy of it should be taken into or distributed in Canada, France, Japan or
the United States except in accordance with an applicable exemption. The
distribution of this news release in other jurisdictions may be restricted by
law and therefore persons into whose possession this news release comes should
inform themselves about and observe any such restrictions.

KPMG Corporate Finance is acting for the Franchising Director and will not
regard any other person as its client in relation to passenger railway
franchising or be responsible to anyone other than the Franchising Director
for providing the protections afforded to clients of KPMG Corporate Finance
nor for advising any other person on the contents of this news release or any
matter referred to in it. 

Media Enquiries:  SSRA Press Office  020 7654 6339/6294/ 6387/ 6234

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