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Tuesday 20 June, 2000

Shadow StrategicRail

Stmnt re New Franchise Map

Shadow Strategic Rail Authority
20 June 2000


Building a Better Railway:
Sir Alastair Morton sets out Map for UK Rail
 
Important changes to the future delivery of Britain's passenger rail services
- focused on customers' needs, local accountability, and best operational
fit - were put into context by SSRA Chairman, Sir Alastair Morton today. The
current re franchising process paves the way for further progress with the
replacement of the 18 short term franchises and is a big step towards the
development of a 20 year strategy for the railway.  
 
The full shape of Britain's railway services, which follows extensive
consultation, is based on the creation of three distinct service groupings -
long distance, high speed (expanded from InterCity); London Commuter, and
Regional services. The final detailed shape of the franchises created within
the groups will only be set once bidders' plans have been considered and
following consultation with key stakeholders.  
 
Announcing plans for changes required to complete the map, Sir Alastair said: 
 
' Our guiding principle is to improve service, not to introduce change for
change's sake. What we are proposing is a map that will revitalise the
network, with franchise areas designed to relate better to each other and to
provide improved accessibility for passengers. People are now using rail in
the largest numbers for 50 years - the changes we are proposing are intended
to ensure sufficient capacity and investment to ensure this trend continues
to provide for 50% growth in travel in the coming decade'.  
 
The main alterations and amalgamations covered by the new franchise map
include:  
 
* Trans Pennine Express: Upgraded to long distance high speed status. 
* Northern: Will combine local and Passenger Transport Executive (PTE)
services currently run by First North Western and Northern Spirit. It will
focus strongly on working with PTEs, with a dedicated business unit for each
PTE area.  
* Wales and the Borders: Would replace four existing franchises which have no
clear focus. This is widely supported, consultation is underway and a
decision to proceed is expected next month.

* Thameslink 2000: A new franchise to provide a larger group of cross -
London services running directly to a wider range of central London
destination.

* West Anglia Great Eastern: re uniting a logical grouping of services
and simplifying operations in and out of Liverpool Street.
 
Consequential and other significant changes to other franchises are already
in the public domain, but were reviewed by Sir Alastair and SSRA Chief
Executive, Mike Grant, at a press briefing today.  
 
Replacement of the shorter term franchises, expiring by 2004, should be
completed in 2001. The process is already underway on Chiltern, East Coast
Mainline, South Central, South West, Central and Trans Pennine Express. The
next franchise to be put up for replacement will be Thameslink, to be followed
by a decision on Wales Rail. In particular, stakeholders in the English services
of Wales and West will be consulted and their concerns addressed. There is a
potential Wessex franchise covering interurban and local services between the
West Midlands and the South Coast. 
 
Mike Grant outlined the rationale behind today's announcement and the next
moves.........

'Our plans take forward the franchise replacement programme through to its
completion before the end of next year, meaning selection and agreement on
principal terms by autumn 
2001. 
 
'We have indicated the strategy and approach we want to adopt on re -
drawing those parts of the franchise map which need to change to achieve a
better grouping of service patterns than emerged at privatisation. 
 
'We have tapped the views of all affected stakeholders and made a substantial
step forward in the provision of improved passenger rail services for this,
and the following decade. 
 
'The emphasis now is on early delivery of the proposals following proper
consultation. The aim is to secure the investment to make it all happen. You
can expect the SSRA to be driving this process forward as quickly as is
reasonable.' 
 
Full details of the franchises and the basis of the changes are set out in
the attached briefing note. 
 
Notes to Editors

A five page briefing note, which details the rationale behind today's
announcement and the regional implications is attached.
 
A national map of the broad regional areas for the new franchise plan is
available from the SSRA or can be viewed on the SSRA website. Separate maps
depicting the proposed regional implications of the changes can be obtained
from the SSRA press office or viewed on our website
(details below).
 
The SSRA's objective has been to establish stronger train operating
companies with longer franchises and the ability to invest to provide extra
capacity and higher quality services to meet growing demand.
 
Following today's announcement, of the current 25 passenger rail
businesses, changes are proposed for six, seven new franchises would be
created, three would be incorporated in other franchises and nine remain
unchanged, reducing the total number of franchises to 22.

 
     The complete list of the re drawn franchises is as follows:

                                                                            
  . Long Distance High Speed            Regional Interurban                   
                                        ScotRail                              
  Virgin West Coast*                    Northern                              
  East Coast                            Wales/Borders                         
  Midland Main Line*                    Central Trains                        
  Great Western*                        Wessex Rail                           
  Anglia /Humber                                                              
  Virgin Cross Country*                                                       
  Trans Pennine Express                                                       
  London Commuter                       Airport Express                       
  Connex South Eastern*                 Gatwick Express*                      
  South Central                         (possibly with Stansted Skytrain and  
  South Western                         a marketing link with Heathrow        
  Thames                                Express).                             
  Chiltern                                                                    
  Silverlink County                                                           
  Thameslink 2000                                                               
West Anglia Great Eastern                                                   
  LTS*                                                                        
                                                                              
                                                                             
* Longer (10 - 15 year) franchise already awarded.                          
 
For Merseyrail Electrics, SSRA is discussing with the PTE a proposal
that they should become the franchising authority. The electric lines on
Merseyside are virtually separate from the rest of the network and it seems
far better that this specialised operation, which is not part of the
strategic national network, should be under closer local control and
accountability.

SSRA has initiated discussions with the Isle of Wight Council for
greater local accountability and control of the Island Line. It is a unique
railway - not part of the national strategic network - which might be
franchised locally as part of an integrated transport strategy for the
Island.

The Franchising Director can exercise his right to allow the existing
franchises to run to expiry and re-tender if acceptable replacement terms
cannot be agreed either with the incumbent or a new bidder.

 
     The existing 25 passenger rail franchises are shown below:

                                                                              
         CURRENT TRAIN OPERATING COMPANIES AND FRANCHISEES - 20.06.00         
  Franchise             Franchisee          Franchise        Start    Finish  
                                            Length                            
  Anglia Railways       GB Railways Group   7 yrs 3 mth      1.97     4.04    
                        Plc.                                                  
  Cardiff Railway       Prism Rail PLC.     5 yrs 3 mth      10.96    3.01    
  Central Trains        National Express    7 yrs 1 mth      3.97     4.04    
                        Group PLC.                                            
  Chiltern Railways     M40 Trains          7 yrs            7.96     7.03    
                        Limited (John                                         
                        Laing plc).                                           
  Connex South          Connex Rail         7 yrs            5.96             
  Central               Limited                                               
                        (subsidiary of                                        
                        Vivendi SA).                                          
  Connex South          Connex Rail         15 yrs           10.96    10.11   
  Eastern               Limited                                               
                        (subsidiary of                                        
                        Vivendi SA).                                          
  CrossCountry          Virgin Rail Group   15 yrs           1.97     4.12    
                        Limited.                                              
  Gatwick Express       National Express    15 yrs           4.96     5.11    
                        Group PLC.                                            
  Great Eastern         FirstGroup plc.     7 yrs 3 mth      1.97     4.04    
  Great North Eastern   GNER Holdings       7 yrs            4.96     4.03    
  Railway               Limited                                               
                        (subsidiary of                                        
                        Sea Containers                                        
                        Ltd.)                                                 
  Great Western         Great Western       10 yrs           2.96     2.06    
                        Holdings Limited                                      
                        (subsidiary of                                        
                        FirstGroup plc).                                      
  Island Line           Stagecoach          5 yrs            10.96    10.01   
                        Holdings plc.                                         
  LTS Rail              Prism Rail PLC.     15 yrs           5.96     5.11    
  Merseyrail            ARRIVA plc.         1 yr.            2.00     2.01    
  Electrics                                                                   
  Midland Mainline      National Express    10 yrs           4.96     4.06    
                        Group PLC.                                            
  North Western         Great Western       7 yrs 1 mth      3.97     4.04    
  Trains                Holdings Limited                                      
                        (subsidiary of                                        
                        FirstGroup plc).                                      
  Northern Spirit       ARRIVA plc.         1 yr.            2.00     2.01    
  ScotRail              National Express    7 yrs            3.97     4.04    
                        Group PLC.                                            
  Silverlink            National Express    7 yrs 6 mth      3.97     10.04   
                        Group PLC.                                            
  South West Trains     Stagecoach          7 yrs            2.96     2.03    
                        Holdings plc.                                         
  Thames Trains         Victory Railways    7 yrs 6 mth      10.96    4.04    
                        Holdings Limited                                      
                        (subsidiary of                                        
                        The Go-Ahead                                          
                        Group Plc).                                           
  Thameslink            GOVIA Limited       7 yrs 1 mth      3.97     4.04    
                        (Go-Ahead Group                                       
                        and Via G.T.I.                                        
                        SA).                                                  
  Wales & West          Prism Rail PLC.     5 yrs 3 mth      10.96    3.01    
  West Anglia           Prism Rail PLC.     7 yrs 3 mth      1.97     4.04    
  Great Northern        Prism Rail PLC.     5 yrs 3 mth      1.97     3.01    
  West Coast Trains     Virgin Rail Group   15 yrs           3.97     03.12   
                        Limited.                                              

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

Further information and announcements by the SSRA are contained on our
website: 
www.sra.gov.uk 

The new Franchise Map for Britain's railways  
 
This note sets out the principles behind the changes being made to the
franchise map, and sets out the rationale for each franchise where the
current boundaries are being changed. 
 
Principles

In preparing the new franchise map, the SSRA has had six main issues in mind: 
 
* The SSRA was not convinced that the group of services put together by BR
back in the early 1990s -which formed the basis of the first franchises -
were necessarily the right ones with which to go forward ten years on with
the new replacement franchises.  
 
* Changes have not been made unless there were benefits in doing so.  
 
* Franchises need to be structured around the needs of passengers and which
will strengthen local accountability and transparency in the provision of
services. 
 
* The franchises should make sense in operational terms, reflecting the
nature of services operated, rolling stock and traction types, and location
of maintenance depots, for example.  
 
* Fewer, but stronger franchises are required - franchises which can raise
money for investment, and hold their own in negotiations with Railtrack and
other rail companies, because investment is the reason for giving longer
franchises. 
 
* The SSRA did not seek to replace at this stage the longer term (10 and 15
year franchises), but where possible, we will negotiate upgrades where
opportunity exists. 
 
* Train services will not be altered to fit the shape of a franchise, but
rather the SSRA will be making sure that the franchise fits the needs of the
passenger.  

The new franchise areas being announced can only be indicative. The final
shape of each will only be fixed following the competitive process and the
result of deals which the SSRA will use to drive up the benefits for
passengers and value for the taxpayer. 

Long Distance High speed operators

Against these criteria, no change has been made to the basic geography of the
five former InterCity franchises which provide the network of long distance,
high speed services throughout the country. (East Coast, West Coast, Midland
Main Line, Great Western and Cross Country). Four of them are already on
longer franchises, and a fifth - East Coast - is therefore in the first batch
of franchises.  
 
Anglia/Humber.  The intention is to develop the Anglia franchise to include a
second trunk route - from Kings Cross to Hull, offering more through services
to Hull, and some competition on the southern end of the East Coast Main
Line. There is a possibility of including connecting branch lines in
Lincolnshire, transferred from or shared with Central Trains (see below).
This can be the subject to negotiation between Anglia and Central, rather
than being imposed as a franchise requirement. 
 
A seventh has been added to this list - Trans Pennine Express - recognising
its importance to the north of England and sending a clear signal that the
route is to move from a regional operator into the InterCity league. Demand
has grown, and a strong company is needed, able to carry through a major
programme of investment in customer service, increased capacity and journey
time improvements. 
 

Regional Operators

 
ScotRail works well as a single franchise, and matches the area of interest
of the Scottish Parliament and Scottish Executive; it is not our intention to
initiate any changes here. The SSRA will be working to objectives and
instructions set by Scottish Ministers, and in Strathclyde we will continue
to work as closely as asked by Scottish Ministers with the PTE which is a
co-signatory of the franchise agreement. 
 
In the north of England it is intended to put together the services currently
run by Northern Spirit - excluding Trans Pennine Express - and First North
Western to provide a coherent network of local services throughout the north
of England. Combining the two will strengthen the other Trans - Pennine
links, and the Settle & Carlisle line. This Northern franchise will focus
strongly on working with the PTEs, with a separate business unit for each PTE
area. It will involve five of the seven PTEs - Nexus, West Yorkshire, South
Yorkshire, Greater Manchester and Merseytravel and its content will be
developed in consultation with them, subject to cost and to consultation with
all stakeholders. 
 
Merseyrail Electrics. SSRA is discussing with the PTE a proposal that they
should become the franchising authority. The electric lines on Merseyside are
virtually separate from the rest of the network and are effectively the
Underground for Merseyside. It seems far better that this specialised
operation, which is not part of the strategic national network, should be
under closer local control and local accountability. Parallels can be drawn
with London Underground.  
 
The Central franchise will concentrate on serving the East and West Midlands,
with a separate business unit within the franchise to reflect the needs of
the Centro PTE. The SSRA has called for proposals which separate services
north and west of Shrewsbury (including through services to/from Birmingham)
as part of a possible Wales franchise. This franchise may also lose or share
services in Lincolnshire and give up those between Birmingham and Stourbridge
(the Jewellery Line) which may be linked with Chiltern to provide more
through services crossing Birmingham and ease congestion at Snow Hill
station. 
 
Wales is currently served by seven franchises with little coherence, and no
ability to work effectively with the National Assembly or to address the
emerging needs of Wales following devolution. No changes will be made to
Virgin Trains and First Great Western, which provide the northern and
southern Intercity links to London, but SSRA has developed the concept of a
franchise for Wales and the border counties on which a decision will be
announced in July, following completion of detailed study and consultation.
The deal between SSRA and Prism announced on 15 June provides for the
reorganisation of the Wales & West and Cardiff Railways to facilitate the
creation of this franchise.  
 

A new Wessex franchise is proposed to include the area bounded by
Worcestershire, Gloucestershire, Bristol, East Devon, Dorset, Hampshire and
London. The franchise could include services transferred from Wales & West,
South West Trains and the longer distance Thames Trains services.

 
In Devon and Cornwall, however, the local and branch line services (currently
operated by Wales & West) act as important feeders to the main line, and SSRA
consider they would be better managed as part of a main line franchise. There
are options to include these services in either the First Great Western or
Virgin Cross Country franchises.  
 
A study will be undertaken to define the Wessex franchise more precisely and a
final decision will be made, following consultation with local and regional
authorities and the Rail Passengers Committees involved. 
 

London and the South East

 
Connex South Eastern is already a 15 year franchise, and no changes are
proposed at this stage, although some opportunities may arise for some
updating and improvement because of Connex' keen appetite for other
franchises. 
 
The South Central franchise is already in the first batch with Connex and
Go-Via shortlisted.  
 
Proposals have already been invited for South West Trains, including opening
up of the possible transfer of the Waterloo - Exeter service to the Wessex
franchise (see above). 
 
SSRA has initiated discussions with the Isle of Wight Council for greater
local accountability and control of Island Line. It is a unique piece of
railway - not part of the national strategic network - which might be
franchised locally as part of an integrated transport strategy for the Island
and should probably not be directly controlled from London.  
 
The Thames franchise currently includes the suburban lines out of Paddington
as well as longer distance services to Oxford, Worcester and Hereford,
Stratford on Avon and the important link from Reading to Gatwick Airport. These
longer distance services might sensibly be included with the Wessex lines. 
 
Chiltern is in the first batch of replacement franchises, based on offers
from the two competitors - M40 Trains and Go-Ahead.  
 
A North London franchise will remain providing Silverlink County services out
of Euston, and initially Silverlink Metro services as well. When the East
London line goes ahead, it may become possible for a separate franchise for
Inner London Orbital services to be created, incorporating services on the
West London line, North London Line and the extended East London line That
would bring important new cross London travel opportunities for Londoners,
integrating inner London services with WCML, ECML, Brighton Main Line and
Waterloo main lines at busy interchanges. The other Silverlink Metro service
from Euston to Watford, which is already closely integrated with the Bakerloo
Line could be part of that. 
 
Thameslink 2000 will be the key cross-London franchise. The Thameslink 2000
project will provide a broader range of services and destinations than exist
today, including the existing Great Northern route from Kings Cross to
Peterborough, Cambridge and Kings Lynn. The new franchise will match the
pattern of service which is forming the basis of the Transport & Works Act
application. Elements of the Prism deal will facilitate the early
establishment of the enlarged Thameslink franchise.  
 
West Anglia services will be linked with those of Great Eastern, reinstating
the logical grouping of services and simplifying the operation of Liverpool
Street station which serves both routes, but some Stansted services may be
removed from it (see Airport Express below). 
 
LTS Rail is already a 15 year franchise. £20.5m worth of additional benefits
have been secured for the franchise as a result of the Prism deal. 
 
Airport Express is an interesting proposition by BAA and National Express,
which SSRA would like to consider further. It is based on a marketing link
between Gatwick Express - already a 15 year franchise, and Heathrow Express -
a non-franchised service run by BAA. Stansted Airport services might also be
included, with the non-stop service to be carved out of the West Anglia
franchise and SSRA will consider how this might be achieved. 
 
Franchise List 
 
 
The 22 franchises proposed would be: 
 

Long Distance High Speed Franchises

 
Virgin West Coast* 
East Coast 
Midland Main Line* 
Great Western* 
Anglia /Humber 
Virgin Cross Country* 
Trans Pennine Express 
 

Regional

 
ScotRail 
Wales/borders  
Central Trains  
Wessex Rail 
Northern 
 

London and South East

 
Connex South Eastern* 
South Central 
South Western 
Thames 
Chiltern  
Silverlink  
Thameslink 2000 
West Anglia Great Eastern 
LTS* 
 

Airport Express
 
Gatwick Express*, possibly with Stansted Skytrain and a marketing link with
Heathrow Express 
 
 
* Longer (10 - 15 year) franchise already awarded. 
 
 

                                                                                
                                                                                
                                                                  

a d v e r t i s e m e n t