FirstGroup’s GWR has been awarded a new National Rail contract to replace a direct award which began on 1 April 2020.

The contract will start on 26 June, and First said it has a core three-year term to 21 June 2025, with an option for the DfT to extend it by up to three further years to June 2028. In practice, Great British Railways is set to take over the awarding and management of rail contracts by 2025, and would then make the decision whether to use the extension option.

FirstGroup will bear no revenue risk and ‘very limited cost risk’ under an annual budget agreed with the DfT; and there is also ‘no significant contingent capital risk’.

The new National Rail contracts, which have replaced franchises and the following emergency contracts, consist of a fixed management fee and a second fee based on performance.

GWR’s fixed management fee will be £6.9 million a year, plus the opportunity to earn an additional fee of up to £17.8 million a year if performance targets are met.

First said it has put aside ‘contingent capital’ of £13 million.

Its plans for GWR over the next three years include extensions of digital ticketing, working with Network Rail and local councils to introduce MetroWest in Bristol, the replacement of diesel rolling stock as a contribution to reducing carbon emissions and continuing to improve the recently-reopened Dartmoor Line to Okehampton.

GWR managing director Mark Hopwood welcomed the new contract as a sign of the DfT’s ‘confidence in GWR as a trusted operator’. He continued ‘we can continue to build on welcoming more people back to the railway’.

Rail minister Wendy Morton said: ‘We’re delighted to continue our partnership with Great Western Railway, and excited by its plans to deliver more benefits for local communities. During the pandemic, GWR was instrumental in keeping critical services moving and this new contract will see it continue to deliver our ambitious Plan for Rail and provide a fantastic service for passengers.’

FirstGroup CEO Graham Sutherland added: ‘We welcome today’s agreement of a new National Rail Contract, which enables us to build on the GWR customer experience and encourage passengers to continue returning to the network. GWR’s experience of operating the route over many years puts us in a strong position to help deliver the UK’s economic, decarbonisation and levelling up agendas and we look forward to providing vital connections for our customers as the recovery continues to build.’