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Thursday 10 August, 2000

Shadow StrategicRail

Statement re Midland Mainline

Shadow Strategic Rail Authority
10 August 2000

Building a Better Railway: 
£238 Million Additional Investment for Passengers on Midland Mainline 
A multi £ million investment package has been agreed for Midland Mainline
following the negotiation of an extended franchise by the Shadow Strategic
Rail Authority (sSRA) and National Express Group plc. The re-profiled
franchise payments mean that these benefits come with no subsidy from the
taxpayer for the rest of the extended franchise term.  
Under the new franchise agreement, Midland Mainline passengers are to benefit
from a substantial package of improvements to their services, costing
approximately £238 million. In return the current ten year franchise term
will be extended by two years to April 2008.  
The new franchise contract will also include a commitment to a 2% improvement
in performance (as measured by the sSRA's Public Performance Measure, which
monitors both punctuality and reliability.)  
The key elements of the new deal are: 
* £60m investment in infrastructure  
* £135m investment in new rolling stock  
* £17m investment in a new East Midlands Parkway Station 
* £22m investment at stations  
* £4m investment in customer service and training 
* Sheffield services extended hourly to Leeds and three additional peak
* Profit sharing with sSRA above a pre-determined threshold 
The investment programme will be achieved through the re-investment of the
premium which the company would otherwise have paid to the Government for
operating the franchise under the terms of the original contract.  
Announcing the new franchise terms, Franchising Director and sSRA Chief
Executive Mike Grant said:  
'The exciting new investment package that we have secured is excellent news
for passengers and their communities, who will benefit both from faster
journey times and new rolling stock. 
'This substantial level of additional investment, coupled with new
performance targets will ensure improvement in the quality of service of what
is already accepted by passengers as a train operating company which performs
Phil White, Chief Executive of National Express said: 
'Today's announcement is a good deal for passengers, staff and shareholders -
and is fully in line with our aim to make public transport the first choice
travel option. Since we won the Midland Mainline franchise in 1996, we have
introduced many service improvements and attracted many more passengers -
with double digit growth in passenger numbers recorded last year.  
'Today, our railway network needs further investment to extend into the
future the levels of passenger growth experienced over the last 3 years. With
more of our rail franchises having longer terms and significant growth
prospects, the Group can invest to deliver train services which will meet our
passengers' real needs for the 21st century.' 

Notes to editors
The Midland Mainline franchise was awarded to National Express for a 10
year duration in April 1996.
Midland Mainline operates high speed and Turbostar train services along
the M1 corridor between London, the East Midlands and South Yorkshire. The
majority of Midland Mainline passengers are travelling to and from London,
but with growing numbers travelling between intermediate stations along the
route. There is a mixture of leisure, business and commuter travel. A map of
the Midland Mainline high speed route is available from the sSRA.

Under current track access arrangements there will be nil subsidy and
nil payment from January 2003.

Premium payment (£ m based on current prices ) 
                2000   2001   2002   2003   2004   2005    2006   2007   2008 
  Existing      0.49   1.56   3.44   5.70   8.15   10.77   3.80   N/a    N/a  
  Future        0.49    0      0      0      0       0      0      0      0   

Under clause 20 of the Franchise Agreement the Franchising Director has
powers to extend the duration of an existing franchise with the incumbent up
to a maximum of two years.
The extension to 2008 is conditional on delivery of key contractual
obligations to agreed dates otherwise the franchise will shrink back to 10
A background note containing more detail on the contractual arrangements
is available from the sSRA.
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 0207 654 6339/6294/6234/6387

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