Franchises extended

Rail

The DfT has extended FirstGroup’s contract for the Great Western rail franchise, and Govia’s for Southeastern.  

FirstGroup’s new direct award for Great Western is for three years to 31 March 2023, extendable to four. Remarkably, this is FirstGroup’s fourth extension to the franchise, which was originally awarded for seven years commencing in April 2006. 

The new contract eliminates most of the revenue risk for FirstGroup. A forecast revenue mechanism (FRM) will apply if revenue variances differ from target in the bid assumptions, outside of a ‘nil rate’ band. Payments or receipts occur when actual revenue is 1.5 per cent higher or lower than the expected FRM revenue, at 90 per cent of the revenue difference.

Govia’s extension for Southeastern runs from 1 April to 16 October 2021, with the option to extend to 31 March 2022.

The agreements run concurrently with the DfT’s new emergency measures agreement announced because of Covid-19, which will run for at least the first six months.