FirstGroup warns more rail renationalisations under Labour represent 'risk' to its business

The transport company which previously ran TransPennine Express has warned further rail renationalisations expected under an incoming Labour Government represent a “risk” to its business.

Bus and train firm FirstGroup has revealed a surge in annual earnings but cautioned over the ongoing threat of strike action and the possibility of renationalisation of UK railways if Labour wins the General Election.

Both the Conservatives and Labour have put forward plans to overhaul UK railways, with Labour pledging to renationalise nearly all passenger rail services within five years if it emerges victorious at the polls next month.

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Labour has said it would look to fold existing private passenger rail contracts into a newly created public body as they expire.

Labour leader Sir Keir Starmer and Shadow Chancellor Rachel Reeves at Leeds railway station in November 2021. Picture: Stefan RousseauLabour leader Sir Keir Starmer and Shadow Chancellor Rachel Reeves at Leeds railway station in November 2021. Picture: Stefan Rousseau
Labour leader Sir Keir Starmer and Shadow Chancellor Rachel Reeves at Leeds railway station in November 2021. Picture: Stefan Rousseau

In the ‘risks and uncertainties’ section of the its results, FirstGroup warned: “A change of UK Government could lead to policy changes resulting in the renationalisation of the National Rail contracts within the First Rail division as the expiry dates of our various agreements with the Department for Transport are reached.”

The firm runs three major UK train operating companies – Avanti West Coast, Great Western Railway and South Western Railway – as well as two open-access passenger rail services, Hull Trains and Lumo.

Up until May 2023, it had also been responsible for the much-criticised TransPennine Express service before it was taken under Government control following months of complaints about extensive delays and cancellations.

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Chief executive officer Graham Sutherland said the loss of the TPE contract was “a huge disappointment for our team who all worked extremely hard to improve services and to successfully recruit and train more drivers than ever before”.

Mr Sutherland insisted that a rebound in passenger numbers, alongside improvements to stations and trains, “demonstrates that the UK rail industry works best as a public-private partnership”.

“We know that growth and innovation are key for the future of the railway and are committed to working with our government partners to provide competitive, sustainable and improved services for all passengers and communities,” he said.

The comments came as FirstGroup posted a 27 per cent jump in underlying operating profits to £204.3 million for the year to March 30 – though this was helped higher by an extra week’s trading and the receipt of higher variable fees in First Rail than the previous year.

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The rise came despite revenues edging lower to £4.72 billion from £4.76 billion.

On a statutory basis, FirstGroup swung to a £24.4 million pre-tax loss, from a £128.7 million profit the previous year as it was hit by costs of it ending participation in two local government pension schemes during the year.

The company also revealed it has applied to launch a new twice-daily London to Sheffield rail service on Hull Trains, which it hopes will be in operation from 2026.

It said: “This would be a competitively priced service which will stimulate modal shift from road to rail, as almost three-quarters of trips between London and Sheffield are currently made by car.”

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It also wants to add an additional eighth return service between London and Hull.

More Lumo services are also planned between Rochdale and the capital.

York Pullman purchase increases North Yorkshire presence

First Bus’s recent £15.5m purchase of the York Pullman Bus Company will increase its presence in North Yorkshire.

In February, it completed the purchase of the company, which operates five coach services brands providing home-to-school and college contracted services, private hire operations including rail replacement services, and a small number of local bus routes on behalf of several local authorities.

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A statement said: “The integration of the York Pullman into First Bus is progressing well and its addition to the First Bus portfolio will enhance our operational footprint in the North Yorkshire region and provide profitable growth opportunities in the contracted and commercial services markets. The adjacent bus services market in the UK is considerable, and we are actively reviewing a pipeline of opportunities to grow the business and win further contracts."​

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