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Rail deals signal work bonanza

THE RE-OPENING of rail franchise negotiations will lead to a boom in infrastructure investment, train operators claimed this week.

The decision, announced by Prime Minister Tony Blair at the Government's Rail Summit last Thursday, will see train operators rushing to demand extensions to their franchise periods.

The move is expected to encourage operators to set up revenue-sharing deals with Railtrack to upgrade track, overhead lines and signalling, and eliminate pinch points for new fleets of high speed rolling stock.

Among the schemes likely to be given new impetus are the £1.5bn upgrade of the East Coast Main Line, a high speed upgrade of the Great Western Line and capacity enhancement on the West Anglia Great Northern Line.

Transport minister John Reid said only a finite number of franchises would be up for renegotiation. These have not yet been decided but would be auctioned off to the operators with the proposals judged in terms of performance improvements and value to the taxpayer.

Renegotiation could see the Government changing operators' contractual commitments under the existing franchises, securing extra investment by underwriting future revenues, or extending franchise lengths.

Great North Eastern Railway, which operates inter-city services on the ECML, has been pushing the Government for the past 18 months to extend its franchise from seven to 15 years. This, it claims, would enable 10 new 225km/h tilting trains to be ordered and three new parkway stations to be built on the route.

Chief executive Christopher Garnett said he was 'delighted' at the announcement and hoped it would now allow the plans to progress.

'We have still got tough negotiations ahead of us but the great thing is that the Government is now open to the idea,' he said.

First Group, which owns Great Western Trains, Great Eastern Railway and North Western Trains, is expected to be among the first to renegotiate franchises.

Spokesman Mike Mitchell said it would start talks with Railtrack immediately to find a way to finance an upgrade on the Great Western Line. The removal of pinch points and an increase in line capacity would enable it to buy a new fleet of 60 high speed diesel trains.

In return it would ask for a 15 year franchise to match that already negotiated by Virgin on the West Coast Main Line. Virgin's longer franchise has allowed it to strike a £2.2bn revenue sharing deal with Railtrack to upgrade the route.

Railtrack said it expected a flood of operators keen to put capacity and performance improvements to Government.

Southern zone director Michael Holden said: 'This is a significant turning point. The Government is offering a way of progressing schemes where it is currently difficult for Railtrack and the operators to strike a deal.'

He added that the company would announce proposals to upgrade the ECML in the next month and that an upgrade on the West Anglia Great Northern Line was also likely.

See Analysis page 10

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