The first National Rail Contracts (NRC) announced in the Williams-Shapps Plan for Rail will start on FirstGroup-operated South Western Railway and TransPennine Express from 30 May.
The deals have a two-year term with options to extend by a further two to May 2025. FirstGroup will bear no revenue risk and ‘very limited’ cost risk under an annual budget agreed by the Department for Transport. FirstGroup says there is also ‘no significant’ contingent capital risk.
For FirstGroup’s 70% share of the First/MTR joint venture for SWR, the fixed management fee is £3.3 million a year with the opportunity to earn up to an additional £9.9 million. For TPE, the fixed fee is £2.3 million with up to an additional £5.2 million. First Group’s contingent capital for both NRCs combined is £15 million, 50% of which is bonded.
The company is discussing an NRC with the government on Avanti West Coast with a duration of up to 31 March 2032: core and extension periods are due to be determined. Great Western Railway’s Emergency Measures Agreement runs to June 2021 and the underlying direct award to 1 April 2023 with an extension of up to one year.
On SWR, the NRC will see it introduce new Alstom suburban trains, introduce 5G Wi-Fi, invest in stations and improve accessibility and continue its enhanced apprenticeship programme. For TPE, the NRC covers final rollout of its ‘Nova’ fleets, similar investment in stations and accessibility and working on the TransPennine route upgrade.