New National Rail Contracts for SWR and TPE

[Watershed]

New National Rail Contracts for SWR and TPE (FirstGroup press release):

FIRSTGROUP SIGNS NEW NATIONAL RAIL CONTRACTS

FOR SOUTH WESTERN RAILWAY AND TRANSPENNINE EXPRESS

FirstGroup plc (‘FirstGroup’ or ‘The Group’) is pleased to announce the agreement of National Rail Contracts (‘NRCs’) with the Department for Transport (‘DfT’) for its South Western Railway (‘SWR’) and TransPennine Express (‘TPE’) train operating companies. The new NRCs will commence on 30 May 2021, when the current Emergency Recovery Measures Agreements (‘ERMAs’) come to an end.

• New NRCs for SWR and TPE have a two-year term to May 2023 with options to extend by up to two further years to May 2025
• FirstGroup bears no revenue risk and very limited cost risk under an annual budget agreed with DfT; there is also no significant contingent capital risk
• Annual fees on NRCs consist of a fixed management fee plus performance fee based mainly on the delivery of customer-focused performance metrics

...

Interestingly these are still not the ultimate form of contract that the government seeks - the Williams Review refers to Passenger Service Contracts.

 

[Goldfish62]

New National Rail Contracts for SWR and TPE (FirstGroup press release):


Interestingly these are still not the ultimate form of contract that the government seeks - the Williams Review refers to Passenger Service Contracts.

They were only ever intended as a stop-gap between franchises and passenger service contracts.

 

[LNW-GW Joint]

There's a bit more detail on these contracts in this Railway Gazette article:
FirstGroup agrees National Rail Contracts for SWR and TransPennine Express | Rail Business UK | Railway Gazette International

The directly-awarded NRCs are envisaged as an interim step between the current Emergency Recovery Measures Agreements and contracts to be awarded by the future Great British Railways.
Having agreed terms for termination of the South Western Railway and TransPennine Express franchises, FirstGroup has now signed NRCs for both operations. These will start from May 31 and run for two years, with an optional two-year extension to be exercised at DfT’s discretion.

There seems little difference between these contracts and the current ERMAs, and suggests it might be 2 or more years before GBR's new regime kicks in.
First Group will introduce the new flexible season tickets, and cooperate across the industry to complete fleet and infrastructure upgrades.
They will earn £4.5m per year (with MTR) on SWR, and £2.3m on TPE, with potential incentive bonuses of £13m and £5.2m respectively.
They still carry the parent support risk they had with the original franchises, until their original termination dates.
Avanti is negotiating a longer NRC potentially for 10 years up to 2032.
GWR also has an ongoing contract up to 2023.

So it seems that the GBR changes will not be immediate, beyond some tinkering with tickets.
It sounds as though all the detail still has to be worked out and then rolled out across the TOCs who will carry on as now for some time.
So no quick rebranding on FirstGroup trains, I think, for those that think it matters...