Skip to main content

Railways: Franchises

Question for Department for Transport

UIN 907885, tabled on 2 March 2015

To ask the Secretary of State for Transport, what criteria his Department uses to allocate subsidies and premiums to train companies for the operation of rail franchise agreements.

Answered on

5 March 2015

The Secretary of State allocates subsidies and premiums for each franchise using the following criteria at the bidding stage. This determines if a franchise will either pay a premium to the department or receive a subsidy.

For a premium paying TOC

The total income bid exceeds the sum of total bid costs and bid margin

For a subsidy paying TOC

The sum of total bid costs and bid margin exceed total bid income.

The Premiums receivable and Subsidies payable are set at the point of contract award based on bid forecast. There are some factors that may make actual payments differ from Bid. They include Revenue (share)/support, profit share, regulatory changes, inflation indices etc.

Named day
Named day questions only occur in the House of Commons. The MP tabling the question specifies the date on which they should receive an answer. MPs may not table more than five named day questions on a single day.