Again they have not handed nothing back, their contract was for 7 years, with an option for an extra 3 years without negotiation if both sides met their obligations. DfT failed to meet their obligations of electrification and IEP by 2013, so therefore First have exercised that rate as they would not otherwise be getting the infrastructure they were paying for.
Would you pay car finance for the cost of a brand new rolls royce, but accept a 30 year old car instead of the Rolls Royce? Its the same thing, the last 3 years were based on IEP, yet they will still be stuck with the 30 year old hsts.
The other irony of this clause is also in the GWML modernisation - Had First continued to run the franchise, they would have been paying millions of back to the DfT for the infrastructure they were paying for but weren’t getting, along with the long promised IEP, but in return would then be getting compensated back by the DfT for the GWML Modernisation - Crossrail, Reading, Electrification, Re-signalling etc... So either way, it was decided by mutual agreement by both First Group and the DfT to exercise this clause, and set the next GWML franchise up to deal with the GWML program, rather than lumping it onto the tail end of the current and starting the next one in the middle of modernisation. So all in all, a rather clever move by First Group and the DfT (Can that be said - Clever in the same sentence as DfT?!!!), bearing in mind that clause was actually installed by the DfT after an early franchise c*ck up.
As for who will run the next GW Franchise - I reckon that it's going to be a close one between Dean Finches National Express and First Group - After they way they've be treating me, I’m almost slightly reluctant to say that, but looking at the other bidders - Yep, First Great Western please!