Northern rail deal to cost taxpayers £2.5bn in subsidies

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The Independent Online

Rail chiefs yesterday revealed that nearly £2.5bn of taxpayers' money is to be poured into an enlarged north of England train franchise as the Government announced its plan for a new "streamlined" network.

Rail chiefs yesterday revealed that nearly £2.5bn of taxpayers' money is to be poured into an enlarged north of England train franchise as the Government announced its plan for a new "streamlined" network.

After a two-month delay the Strategic Rail Authority (SRA) signed a deal with the state-backed Dutch company, Ned Railways, and Serco to run routes in the north until 2013.

The agreement coincided with an announcement by Alistair Darling, the Transport Secretary, that the 25 existing train franchises are to be reduced over the next few months to 19.

The north of England licence is scheduled to run for eight years and nine months from 12 December at an annual rate of subsidy of about £300m.

It is thought that negotiations over the amount of money required by the consortium to run services currently operated by Arriva Trains Northern and First North Western delayed the agreement over the new licence which had been due to start this month. The franchise contract includes a commitment to reduce cancellations and delays by more than 15 per cent in the first five years.

A spokesman for the SRA said the present subsidy to Arriva Trains Northern and First North Western amounted to about £430m annually. However he conceded that long distance routes had been stripped out of the franchise and were part of the Trans-Pennine licence.

As part of yesterday's announcement by Mr Darling, a new Greater Western franchise will be formed from the existing First Great Western, First Great Western Link (Thames) and Wessex services, following the expiry of current arrangements. The invitation to tender for these services will be issued next summer.

The Greater Northern services - left over when West Anglia services in the original West Anglia Great Northern franchise were merged into the company now called "One" - will merge with Thameslink.

Following the expiry of the current Central franchise in 2006, services will be distributed into the Silverlink, Chiltern, Virgin CrossCountry, Midland Mainline and Northern franchises. A new franchise may also be created incorporating South West Trains and the Isle of Wight line. The alternative for the Island Line would be a form of community management as set out in July's White Paper, in which the Government announced that the SRA would be scrapped and that consideration would be given to how franchises could be aligned with Network Rail's regional structure.

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