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Conditions Relating to the Funding of New or Enhanced services Promoted by Local Bodies

Subject to funding being allocated for this purpose in Railway Control Period 5, DfT would intend to resource fund the provision of new and enhanced services where:

  1. The promoter has engaged at an early stage with DfT, the TOC, Network Rail and all have indicated that there is merit in the scheme being developed further.
  2. The promoter demonstrates, and has Network Rail and TOC endorsement, that the enhancement is deliverable in planning, engineering and operational terms including being consistent with RUSs.
  3. The scheme is affordable from any budget which might be set for this purpose for in CP5.
  4. The enhancement package (including any service reductions proposed to fund it) must demonstrate a business case (BCR in excess of 1.5) before implementation.
  5. The promoter accepts the risk on any capital investment required and identifies a funding source.
  6. The promoter agrees to fund any additional subsidy requirements arising from the provision of the new service for a period of three years (and remains on risk for a DfT decision not to support the scheme) OR identifies decrements elsewhere or new revenue sources (which would need to be agreed with DfT) on the local network including fares increases above RPI+1% or +3% (where applicable) which would contribute to a reduced overall subsidy requirement.
  7. The promoter should provide information to DfT on usage throughout the three year trial period. After year 2, the promoter would assess the financial and economic performance of the service based on year 2's results.
  8. Should continuing the service demonstrate a BCR in excess of 1.5, subject to affordability within the available budget, DfT would consider taking on the responsibility of funding its continuation after year 3 alongside other services within a franchise, OR if funding is not available, invite the promoter to identify decrements to enable the service to continue.
  9. Should continuing the service demonstrate a BCR of between 1.0 and 1.5, DfT and the promoter would negotiate but with no presumption of Government funding.
  10. Should the BCR be less than 1.0, DfT would not provide any funding.
  11. DfT would not propose to take any financial responsibility until April 2015; hence services which start before April 2012 would need to be funded wholly by the promoter for a period of more than 3 years.
  12. For new stations being served by existing services, although the promoter might have to provide some pump-priming funding until the station becomes established, DfT would expect that fare income would cover additional operating costs and that no additional subsidy would be required after 3 years.

For devolved networks within the TfL concession and Merseyrail Electrics concession, the policy adopted in the 2007 White Paper would apply and extra services would be funded through locally determined budgets.