I am pleased to inform the House of the award of 2 new passenger rail franchises. Following separate, rigorous competitions I intend to award the Northern franchise to Arriva, and the TransPennine Express (TPE) franchise to First. These awards will be confirmed subject to successful completion of a standstill period of at least 10 days.
Both franchises are due to start on 1 April 2016. The Northern franchise will run for 9 years, until 31 March 2025, with an extension of 1 year callable at my discretion. The TPE franchise will run for 7 years, until 31 March 2023, with an extension of 2 years callable at my discretion.
My department set out ambitious plans for the new franchises in our invitations to tender earlier this year and both Arriva and First have gone well beyond them; exceeding our requirements. This means that these franchises will oversee the biggest transformation of rail journeys in the north of England in decades, with an unprecedented package of improvements for passengers.
Together, these operators will oversee a massive £1.2 billion boost to rail services with brand-new modern trains, more seats, more services and a host of improvements to deliver a modern, 21st century passenger experience. This one nation government is committed to closing the economic gap between north and south, and these new franchises will help to bring the Northern Powerhouse to life. They will play key roles in rebalancing the economy, creating jobs, opportunity and growth, and will provide significantly better journeys across the region. Crucially, in a key step towards full devolution, these contracts will be managed in Leeds by a joint team from the Department for Transport and Rail North, which represents the region’s 29 local transport authorities.
Across both franchises, Arriva and First will provide much needed new-build trains, with the introduction of more than 500 brand-new carriages. They will also remove the outdated and unpopular Pacer trains from across the north. These plans will create space for more than 40,000 extra passengers at the busiest times across the north and bring in thousands of extra services a week for passengers. Alongside these investments the franchises performance will be improved to meet challenging targets to reduce cancellations and short-formations.
There will also be significant improvements for passengers’ experience, with the roll out of free Wi-Fi on trains and at stations and the installation of on-board media servers providing on-train entertainment and real-time passenger information to smartphones and tablets. Automatic delay compensation for season and advance purchase ticket-holders will be introduced across the region. First and Arriva will also invest more than £55 million in improving stations and bring them into the 21st century.
The new franchises will also mean significant returns to the government and better value for the taxpayer. On TransPennine Express, First will pay premium to the government of around £400 million over the life of the new franchise, taking the franchise out of subsidy for the first time. On the Northern franchise, Arriva will reduce the amount of annual government subsidy required by around £140 million over 9 years.
The award of these franchises is a hugely positive story for rail in the north of England. They are further proof that private sector competition is good for passengers, local communities and taxpayers. This government promised passengers we would give them the premium-quality rail services that a Northern Powerhouse deserves. I am delighted that these awards will deliver exactly that.