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Railways: West Coast Main Line

Answer

Detailed below are the payments envisaged in the original franchise agreement, the actual sums paid (including those of the substituted ““letter agreement””) and the subsidies expected to be paid under the reinstated franchise agreement. In 2002 a ““letter agreement”” was put in place to reflect Railtrack's failure to deliver the agreed terms of the west coast modernisation programme. The recently announced agreement puts the Virgin West Coast franchise back on a secure contractual footing and enables the department to secure additional public value by incentivising the operator to reduce costs. Bracketed figures are premia planned to be received by the Department. It is to be noted that the sums paid include actual incentive payments and receipts. The sums paid also include the impact of the ORR regulatory review of track access charges, as do those planned for the reinstated franchise agreement. The reinstated franchise agreement, unlike the original, includes a revenue share/support arrangement in the eventuality that a target revenue is exceeded/fails to be achieved. This is in accordance with other recent franchises. The Department for Transport will receive 50 per cent of revenues achieved between 102 per cent and 106 per cent of an agreed target revenue and80 per cent of revenues greater than 106 per cent of target revenue. Revenue support arrangements are a mirror image of these; that is, should the franchisee fail to achieve between 98 per cent and 100 per cent of target revenues the franchisee will receive no support. Should 94 per cent to 98 per cent of target revenue not be achieved the department pays 50 per cent of that revenue not achieved; 80 per cent should revenues received be less than 94 per cent.

Franchise Year	Original Franchise Agreement Plan(£m)	Actual Payments(£m)	Reinstated Franchise Agreement
1996-97	92.5	5.8
1997-98	77.8	76.6
1998-99	68.4	70.2
1999-2000	56.1	59.1
2000-01	53.7	57.7
2001-02	52.3	190.9
2002-03	(3.9)	188.8
2003-04	(52.7)	328.6
2004-05	(55.8)	113.0
2005-06	(72.0)	68.2
2006-07	(126.6)	193 (estimate)	72.9
2007-08	(151.6)		282.9
2008-09	(167.6)		312.4
2009-10	(184.5)		265.3
2010-11	(202.2)		230.1
2011-12	(220.3)		198.8
(Figures in brackets denote planned premium)

Secondary information

Type

Written question

Reference

886; 688 c74-5WA

Session

2006-07

Related items

Railways: West Coast Main Line
Wednesday, 24 January 2007
Written questions
House of Lords

Railways: Virgin Rail Group Franchise
Wednesday, 13 December 2006
Written statements
House of Lords

Subjects

Contracts Franchises Payments Railways Profits Subsidies West Coast main line Virgin Trains

Contains statistics

Yes

Link

View this Written question on www.publications.parliament.uk