Article on Firstgroup on standard.co.uk

[sibodkent]

www.thisislondon.co.uk/standard-business/article-23690687-details/Revealed%3A+FirstGroup%27s+secret+50m+bailout+from+taxpayer/article.do

Essentially its detailing the fact that FirstGroup got £50 million taxpayer subsidy to keep running as their profits fell below a certain level, and thus got propped up by the government.

Also it highlights the problems of all train operators serving london.

IMHO All commuter services need to be heavily subsidised by governments:
1. To ensure it is affordable to the general public.
2. To ensure that services are retained where they are essentialy not profitable, but are an essential service for people in remote locations.
3. To keep the economy moving.

Why doesn't the government include rail subsidy in it's plans to have a greener britain? They'll throw £1000 at you to scrap a car when buying a new one, millions at new roads and toll systems, etc.

Yet when it comes to rail, they want as little expenditure at central government as possible.

It's completely the opposite on the continent. Mot rail networks are to the best of my knowledge, heavily subsidised, and lauded the world over.

This farce just shows how broken their private rail network really is.
The sooner they admit their mistake and stump up the cash the better.

Apparently National Express are not far off handing the keys back.
Please, please, please SER, do the saim!

[William Dargan]

The inherent problem with the privatised railway model is that the business is required to show a return at the end of each year and pay a dividend to shareholders.

For all the PR fluff that any railway company puts out about 'putting passengers first' or 'running the railway', you'll find that behind closed doors, in a boardroom - it's all about delivering an operating profit - this is why in Britain, a privatised railway system simply won't work - the profit margins are too tight, the economic models vary from area to area and the operations are subject to too many outside factors (snow for example ).

Sadly, successive governments have always seen the balance sheet of the railway industry and tried their best to at first cut back the amount of money the taxpayer was expected to shell out, then tried to rid the cost 'burden' completely from the books by selling off the operations to private companies who promised attractive premiums in return for operating rights.

And we all know how much politicians love to be able to balance the expenses!

[chapelwood]

This isn't a secret subsidy, but the operation of the 'cap and collar' provisions in the franchise agreement As the franchise revenue is significantly below the profile agreed when the franchise agreement was signed FGW and the DfT share the shortfall. If revenue had been significantly above the profile FGW would have had to pass a proportion of the surplus over to the government. It's actually a perfectly reasonable way of sharing the risk - if bidders for the franchise had had to bear the whole revenue risk they'd have wanted a significantly higher subsidy. I think these 'cap and collar' provisions are included in all, or at least almost all, TOC franchise agreements, though they don't apply in the first two years of a franchise.
Chapelwood

[O.V.S.Bulleid]

Quite so...

...so Richard Bowker must be a little worried as National Express is only 18 months into its contract.

Yours sincerely
O.V.S.Bulleid

[trainplanner]

Chapelwood is completely correct in terms of First group benifiting from the revenue share agreeements as part of thier franchise commitment. it is understood that all first group franchises bar transpennine will receive revenue support.

My Bowker will indeed be worried as he has 3 years before he could conceievably recieve any support. I supect he will be handing the keys back regardless...

Regards

TP