Save the Train: What does First pay the government for Greater Western?

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January 15, 2006

What does First pay the government for Greater Western?

Here's a breakdown of the payments that First receives (for the next three years) then makes (for the following four years) for the task / honour of running trains Westward from London.

2006/07 First to RECEIVE a SUBSIDY of 97 million pounds
2007/08 First to RECEIVE a SUBSIDY of 46 million pounds
2008/09 First to RECEIVE a SUBSIDY of 14 million pounds
2009/10 First to make a PREMIUM PAYMENT of 20 million pounds
2010/11 First to make a PREMIUM PAYMENT of 111 million pounds
2011/12 First to make a PREMIUM PAYMENT of 168 million pounds
2012/13 First to make a PREMIUM PAYMENT of 233 million pounds

At the end of 7 years, First will have made a net premium payment of 375 million pounds - an average of 53 million pounds per year.

The figures sound huge, but then so are passenger numbers. To put them in perspective, there are 25 million journeys made into or out of Paddington station, First's busiest, every year. The 53 million pound payment is the equivalent of a 2 pound per head tax for arriving and departing passengers at Paddington, with no tax at all for customers using their services between any other two stations.

First can relinquish the contract at that point without penalty, or they can carry on for a further 3 years:

2013/14 First to make a PREMIUM PAYMENT of 302 million pounds
2014/15 First to make a PREMIUM PAYMENT of 363 million pounds
2015/16 First to make a PREMIUM PAYMENT of 427 million pounds

The headline figure of "First awareded a contract under which they pay the government 1.5 billion" is only strictly true if they chose to take those final three years, and if the figure aren't stacking up by that time I guess they might well decide they would do better to end at that point and bid for the next period.

Sources - Local Transport Today and Office Of Rail Regulator

Posted by gje at January 15, 2006 12:39 AM