I understand from a phone converstion last night with a usually reliable source that First are in discussion with the DfT on running rail replacement bus services on the following routes:

a) Par to Newquay
b) Liskeard to Looe
c) Totnes and Ivybridge to Plymouth
d) Chippenham to Frome
e) to Severn Beach

It now costs 630,000 to hire a sprinter train for a year and 200,000 to run it ... as opposed to around 100,000 to run a bus. There are suggestions that the roscos (rolling stock companies) are making large profits.  And in Wiltshire, pensioners now get free bus travel but have to pay for the train ....

FirstGroup said today that full-year pretax profit rose 6 percent after stronger UK rail earnings offset higher bus fuel costs.
http://today.reuters.com/business/newsArticle.aspx?type=basicIndustries&storyID=nWLB9328

Here is another article on this.
http://www.tmcnet.com/usubmit/2006/05/16/1650911.htm

Some quotes from the article above :

"Moir Lockhead, First's chief executive, is expected this week to reveal a rise in rail profits but a sharp dip in earnings from the bus division. Profits from trains are due to show a 10 per cent lift to GBP 70m, while UK bus profits are down 9 per cent to GBP 97m."

"FirstGroup won the Thameslink Great Northern and Great Western franchises earlier this year, although it did not start running them until April. The wins boosted its share of UK rail passenger revenue from 15.3 per cent to a market-leading 23.2 per cent, according to company estimates."

"Some sceptics have questioned the value of the new franchises, suggesting that First overpaid when it bid GBP 2bn for them. But the company is confident it can squeeze additional profits from them."

"Some of FirstGroup's worst- performing bus companies are coming under scrutiny in the City. Damian Brewer, an analyst at JP Morgan, said: "Operations in the Scottish Borders and in Devon and Cornwall... lose GBP 5m-GBP 7m per year. With ScotRail and Great Western rail contract hurdles now cleared, FirstGroup can now move on and rationalise these operations, either to ensure break even or possibly to exit."

I would assume that First would recieve funding from the DfT , were it to begin operating the bus services described in the first post of this topic.

Yep, and that much higher price was quoted by another GW manager a couple of months back, knowing that he was talking a 153 one coach train.   Seems that the price quoted sometimes gets muddled or smudged to tell the story they want, rather than to be relevant to the service they're taking about at the time.

Here are a couple of links that highlight areas of interest regarding this issue.
http://www.timesonline.co.uk/article/0,,2-2246601,00.html
http://www.rmtbristolrail.org.uk/archives/00001988.shtml