UK: Engineering deal seals franchise extension

[John Ashworth]

Engineering deal seals seven-year extension to Chiltern's rail franchise

Train operator agrees to oversee £250m improvements programme funded via Network Rail

* Dan Milmo
* guardian.co.uk, Friday 15 January 2010

Train operators will be able to overhaul creaking rail infrastructure without direct government investment after the Department for Transport struck a groundbreaking deal with Chiltern Railways to slash journey times between London and Birmingham.

Chiltern will be rewarded with a seven-and-a-half year extension to its twelve-and-a-half-year contract after agreeing to oversee a £250m engineering programme on the route. Once the programme is completed by 2013, the London-to-Birmingham service will be nearly half an hour faster at one hour 40 minutes.

The innovative funding structure shelters the taxpayer, with the owner of Britain's rail system, Network Rail, raising the debt funding which will then be invested by Chiltern. The investment will then be paid back by the franchise owner over the next 30 years through track access charges levied by Network Rail.

The Association of Train Operating Companies said the deal backed the case for lengthening rail franchises, which typically last less than 10 years. "We want to move to more widespread use of longer franchises, together with other smart franchise reforms, to free train companies to provide passengers and taxpayers with a better deal," the association said.

Virgin Trains, which is lobbying for a £1bn investment to improve journey times from London to Scotland, said the deal could open the way for further investment in key routes.