First grabs ScotRail off National Express

A row erupted yesterday after the bus and rail operator FirstGroup was awarded the ScotRail franchise, which covers all commuter and regional train services north of the border.

A row erupted yesterday after the bus and rail operator FirstGroup was awarded the ScotRail franchise, which covers all commuter and regional train services north of the border.

The Tories called on Nicol Stephen, the Transport Minister in the Scottish Executive, to explain his links with First. He was a consultant to the company in the mid-1990s.

An executive spokeswoman said it would be "improper" to suggest this had any bearing on the awarding of the franchise, saying Mr Nicol did not know which company had been successful when he approved the preferred bidder.

The selection of First by the Government's Strategic Rail Authority and the Scottish Executive is a setback for the current operator of the franchise, National Express. The other bidder was Arriva.

It also amounts to revenge for First, which lost the Greater Anglia franchise to National Express last year despite being one of the incumbent operators.

The new ScotRail franchise will start in October and will last seven years, with a possible three-year extension. It is the third successive franchise competition First has won. Last year First was awarded TransPennine and this year it has also been selected to take over Thames Trains, now renamed Great Western Link, from Govia.

First is also bidding for the East Coast Mainline and the newly created Integrated Kent and Northern franchises. Moir Lockhead, the company's chief executive, said he would be happy if First emerged with four big franchises under its belt at the end of the process.

ScotRail has total revenues of about £400m a year, half of which come in the form of grants from the SRA. The inclusion of the franchise into First's rail business will take its revenues from trains back up to about £1bn a year out of total turnover of £2.5bn. Its other big franchise is First Great Western, which operates inter-city services from Paddington.

The timing of the ScotRail announcement came as a surprise. A decision had not been expected until after the Secretary of State for Transport, Alistair Darling, announces the outcome of the Government's rail review early next month.

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