An occasional series celebrating the relationship of the Minister of State for Transport with her Department...
Theresa Villiers (Minister of State (Rail and Aviation), Transport; Chipping Barnet, Conservative) holding answer 24 June 2010
The two franchise extensions will have a theoretical opportunity cost caused by foregoing the higher premium/lower subsidy expected if the franchises were re-competed instead of extended. This is difficult to quantify, because assumptions need to be made about the likely prices from new bidders versus the cost of extending with incumbents.
The opportunity cost arising from the delay to replacing franchises was estimated to be £6 million for Essex Tameside and £18 million for Greater Anglia. However, we believe that including the two franchises in the reformed system, on which we will be consulting shortly, will yield benefits for passengers and facilitate investment in the railways which will outweigh these costs.
In accordance with our accreditation process as advised to bidders the Department does not expect to have cause to incur compensation.
So. DafT is still expecting to get more/pay less for these two franchises when re-reletting them in the middle of a recession?
Good effort!
