Posted 20th May 2021 | 1 Comment

REVIEW: FirstGroup signs National Rail Contracts

FIRSTGROUP has signed two of the new-style National Rail Contracts, worth up to £20.7 million a year.

The contracts are for South Western Railway and TransPennine Express, and will start on 30 May when the present Emergency Recovery Measures Agreements end.

First’s new NRCs will run for two years, with an option to extend them by a further 24 months, which would take them to May 2025.

First said it would bear ‘no revenue risk and very limited cost risk’ under an annual budget agreed with the Department for Transport.

For the Group’s 70 per cent share of the First-MTR joint venture for SWR the fixed management fee is £3.3 million a year with up to a further £9.9 million annually, which is the greatest possible bonus for exceptional performance.

For TransPennine, First will be paid a management fee of £2.3 million a year, with a maximum annual performance bonus of £5.2 million.

In a statement, First said the new contracts ‘achieve a more appropriate balance of risk and reward between FirstGroup and the Government’.

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • Steve Alston, Crewe

    Perhaps the Competition Commission should look into why these Government contracts were awarded without a tendering exercise? Perhaps another provider could provide a more honest and cost effective solution than FirstGroup? I reckon Greensill Capital, Wirecard, Enron or Polly Peck could do better.

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