18 February 2002

Building a Better Railway: 370 Million Investment Programme for Chiltern Railways - 20 Year Deal Signed

Private finance will bring big benefits for passengers in a deal signed today between the SRA and M40 Trains, the owner of the Chiltern Railways franchise. Chiltern Railways will continue to run the service, which provides trains from London Marylebone throughout the M40 corridor to Birmingham, for up to 20 years. The agreement, which will lever in up to 371million of private finance over the length of the contract, will deliver increased capacity on the route and major benefits to passengers. A significant proportion of the investment package has been contributed by M40 Trains shareholder John Laing and the Royal Bank of Scotland.

SRA Chairman Richard Bowker, said:

" This is another good example of the private sector expressing confidence in the rail industry's long term future. The agreement with M40 Trains will deliver increased capacity, both through infrastructure and rolling stock improvements, as well as improvements to stations and in customer service geared towards creating a 21st Century railway. Passengers can look forward to more seats, more trains, and a better all round journey experience.

"In our Strategic Plan we stressed the importance of delivering increased capacity in London and the South East, and today's announcement will play its part in achieving that. Moreover, it will see the further development of the Chiltern route to Birmingham as a real alternative to the congested M40 motorway for business and leisure travellers, helping to deliver the modal shift envisaged in the Government's Ten Year Plan."

Contracted Improvements

Chiltern Railways are now contracted to deliver a number of improvements Highlights include:

  • Restoration of double track between Bicester North and Aynho Junction to be commissioned in August 2002. This will remove the last single track bottleneck between London Marylebone and Birmingham Snow Hill, and enable an enhanced and more reliable timetable to operate. This will provide an alternative route for passengers travelling between London and the West Midlands whilst engineering work is taking place on the West Coast Mainline.
  • 15 out of 16 trains to arrive at their destinations punctually and reliably - to be achieved from December 2003 (exceptions may be granted where infrastructure enhancement work is being undertaken);
  • A programme for the delivery of 15 additional vehicles between September 2002 and May 2005 and a full refurbishment of all existing Class 165s for completion during 2004. This is in addition to 7 vehicles which are currently under construction. There is also a requirement to deliver as much additional rolling stock as is needed to meet demand - up to certain limits;
  • Platform extensions at 13 stations to cater for longer trains to be delivered in two phases - starting in May 2002. More will follow when demand requires;
  • Construction of a new depot in the London area, and extension of the existing depot at Aylesbury - to achieve better train reliability;
  • Operation of through services between London Marylebone and Kidderminster from September 2002;
  • A station improvement programme including customer information systems, enhanced passenger security, improved facilities for disabled passengers, and better accessibility to stations;
  • Reopening of two new platforms at Birmingham Moor Street station;
  • A commitment to undertake the project management of a train protection pilot scheme on behalf of the industry in response to the recent Uff/Cullen report - subject to agreement from Railtrack.

Planned Developments

  • Chiltern have committed to implement infrastructure upgrades in the London area, and between High Wycombe and Bicester North, which will allow more trains and improved journey times, subject to funding being available on acceptable terms. The funding of this scheme will be raised through a Special Purpose financing Vehicle (SPV) on which development work will take place over the next year.
  • A project to reduce journey times and increase train frequency on the Metropolitan route between Marylebone and Aylesbury via Amersham will be developed and considered in March 2005 - in the light of the routing of Crossrail, and the SRA's priorities;

Future Proposals

A package of potential future schemes is included in the contract, which might be developed further in the next few years. Included are infrastructure improvements between South Ruislip and High Wycombe, and other ideas for the longer term such as new parkway stations, the development of new routes, and a local service in Greater London - provided capacity is available.

Notes to Editors

1. In August 2000, the Authority selected M40 Trains Ltd as the preferred Counterparty, and agreed Heads of Terms with them for the replacement of the Chiltern Railways franchise.

2. In March 2001 the SRA entered into a Deed of Amendment to the original Franchise Agreement with M40 Trains to include in the contract a number of significant improvements to the current Chiltern Railways franchise, given that, due to post Hatfield effects on the industry, it was taking much longer than expected to reach the point where the parties, including Railtrack, could commit to a new long-term franchise.

Following the Deed of Amendment, further issues have arisen, which have made the contents of the new Franchise Agreement different to those contained in Heads of Terms. The bulk of the alterations to both dates and content since Heads of Terms have been caused by:

  • The changed circumstances of Railtrack, meaning that they are no longer able to finance enhancement investment;
  • the changes in the industry following Hatfield;
  • the lack of available signalling resources, and
  • SRA affordability constraints.

    3. A 20-year franchise would require delivery of all the Contracted Improvements, Planned Developments, and delivery of a substantial package of the Future Proposals to ensure that investment continues through the franchise term with significant passenger and strategic transport benefits. If no future proposals are committed by year 2005, then the franchise term would shrink back to 12 years. If the Bicester North-High Wycombe and London infrastructure upgrade cannot go ahead - for example, if it could not be financed on acceptable terms, then following a Special Output Review the SRA has the option to shrink back the franchise length to 10 years.

    4. The 371m capital investment figure assumes that the High Wycombe-Bicester North and London area infrastructure upgrade will go ahead funded by SPV finance on acceptable terms. The 371m figure also assumes that a further 131 new vehicles will be required over and above the existing 118 vehicles already in service and 7 under construction. This will take the fleet size to 256 vehicles by 2022 - which will be required to meet the forecast demand. M40 Trains are contractually committed to ordering 15 new vehicles irrespective of demand, and are contractually committed to ordering the further 116 if demand requires them, which it is forecast to do.. The 371m figure does not include the value of implementing any Future Proposals, nor does it include the value of implementing the London Marylebone-Aylesbury via Amersham infrastructure upgrade - because neither of these are firm contractual commitments at this stage.

    5. The operation of additional trains is subject to the Rail Regulator granting additional access rights.

    6. Chiltern Railways achieved an 89% overall satisfaction level in the Autumn 2001 National Passenger Survey, the highest rating amongst all train operating companies.

For further information call 020 7654 6000