NEW direct awards have been agreed for First Group’s Great Western Railway and Govia’s Southeastern, where the existing franchises had been due to end at 02.00 on 1 April.

GWR now runs for another three years, extendable to four, and Southeastern for up to two years.

Both awards are management contracts for at least the next six months, in which the Department for Transport collects the revenue and covers the costs, paying the operators up to 2 per cent of the previous ‘cost base’ as an operating fee.

Announcing the GWR and Southeastern deals, rail minister Chris Heaton-Harris said: ‘We are taking decisive action across the board to ensure vital rail services continue, allowing those people who cannot work at home to get to work – particularly our NHS, emergency services and other vital industries.

‘These contracts will keep services running in the short-term but also are positive news for passengers in the future, focusing on more reliable services, extra capacity and improvements to the stations they use every day.

‘These are unprecedented times and the rail network is central to our national resilience.’

FirstGroup chief executive Matthew Gregory is already looking forward to the time when full services can be restored.

‘Whilst the immediate focus of GWR is to ensure that key workers, vital to the country’s response to coronavirus, can get to where they need to go, continuity of rail services will also be critical to a restoration of normal life when the present uncertain and difficult situation is overcome. In the longer term this new agreement will mean that customers can return to rail as their preferred choice of travel; with more seats, more services, better stations and more flexible ticketing to help reconnect the people and communities we serve,’ he said.

He continued: ‘When the present emergency measures agreed with Government come to an end, today’s agreement will ensure that GWR will continue to deliver sustainable benefits for customers and an appropriate balance of risk and reward for our shareholders and the Government.’

Southeastern managing director David Statham has also welcomed the news, saying: ‘We continue to work with our industry partners to ensure that services are available to get people working in healthcare, food and other vital public services where they need to be. When customers are able to begin travelling as normal, we look forward to reconnecting our communities and further improving capacity, performance and customer satisfaction.’ 

Management contracts were announced for all English franchises by the DfT a week ago, although LNER and Northern are already state-owned, while Govia Thameslink Railway was a compromise deal in which the DfT collected the revenue and paid GTR a fee, although GTR had remained responsible for its costs until now.

The position is less clear in Scotland, where the Abellio ScotRail franchise is in any case set to end in 2022, after the Scottish Government had said it would be taking advantage of the first break clause to terminate the deal. After the general decision to cut back all rail timetables in Britain sharply last week, Transport Scotland said only that it is ‘investigating ways to provide proportionate relief to operators, while also ensuring contractual incentives remain’.

In Wales, Keolis Amey Wales Cymru Ltd is the ‘development partner’ of government-owned Transport for Wales, and not a traditional franchise.

Although the DfT has laid a tentative limit of six months on the duration of the present management contracts, the delayed Williams Review is set to recommend a permanent move to this kind of deal in the longer term, and the return of high-risk contracts seems unlikely.