UK Proposes Longer Rail Franchises

19 January 2010 (Last Updated January 19th, 2010 18:30)

Future rail franchises in the UK will run for at least ten years with a possibility of up to 22 years in return for additional investment, Transport Secretary Andrew Adonis has announced. Under the proposed changes to rail franchising, train operators will get more scope for innovation

Future rail franchises in the UK will run for at least ten years with a possibility of up to 22 years in return for additional investment, Transport Secretary Andrew Adonis has announced.

Under the proposed changes to rail franchising, train operators will get more scope for innovation as well as stronger incentives for performance and maximising passenger growth.

In addition, tougher performance measures will be introduced so that poor-performing operators could be stripped of their franchises.

"Franchise length is about striking a balance between securing investment from bidders – which comes from longer franchises – and testing the market regularly to ensure best value for taxpayers – which comes from shorter contracts," Adonis said.

Franchisees will also have to pay larger deposits called performance bonds so that the operators do not leave their franchises easily when revenues decline. Parent companies will continue to be required to provide financial guarantees.

At the moment, most rail franchises are let for seven or eight years.