M40 to put new stock on Chiltern

Rail privatisation: The team that won the Chiltern franchise yesterday sets out spending plans

The two-and-a-half year moratorium on new rolling stock caused by the uncertainty over rail privatisation is to be ended by M40 Trains, which yesterday won the Chiltern Railway franchise.

M40, which is a management buyout team backed by 3i and John Laing, said it would spend pounds 10m on four three-car diesel units within a month of the start of the franchise, which was likely to be on 21 July.

The company added that an announcement would be made in a month on who would build the trains, which will be used to increase the frequency on the Marylebone to Birmingham Snow Hill service and on extra services between Aylesbury and Marylebone. The trains will be leased, possibly from the manufacturer.

They are likely to be supplied by Adtranz Derby works and be a new, all- purpose 100 mph design, which the manufacturer hopes will be suitable for other new franchisees and be in service by late 1998.

Rolling stock manufacturers, who have faced an empty order book, will be pleased that M40 seems to have found a way round the "residual value" problem which has stymied orders for new trains. This arose from the fact that the franchises, of which Chiltern is the eighth to be allocated, have been only for between seven and 15 years, while rolling stock has a 30- or 40-year life.

Some of the other new franchisees have promised to order new trains, but none have committed themselves to doing it so quickly, or on such a short-term franchise.

The company hopes to reduce the journey time between London and Birmingham to under two hours, posing serious competition to the West Coast Main Line from Euston, which is becoming increasingly unreliable while awaiting refurbishment of the line.

M40 trains will receive pounds 16.5m in government subsidy in its first year, exactly the same as BR would have received, but under the terms of the agreement the amount of subsidy will be reduced to pounds 2.9m (at today's prices) by 2003/4.

The company is also committed to spending pounds 1m on station improvements, including creating 300 extra car park spaces, installing automatic ticket barriers at Marylebone station and creating 250 secure cycle racks, including 50 at Marylebone enabling commuters to leave bikes overnight.