FirstGroup and Arriva secure rail franchises to boost Government's bid to build a Northern powerhouse

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The Government’s pledge to build a Northern Powerhouse travelled to the railway industry yesterday with a £1.2billion boost.

New contracts for franchises for FirstGroup and Arriva will mean 500 new carriages, more than 2,000 extra services a week and room for 40,000 extra passengers. 

The investment will mean the end of the old, unpopular Pacer trains.

New rail contracts for franchises for FirstGroup and Arriva could finally spell the end of the hated Pacer trains, one of which is seen here pulling into Newcastle

FirstGroup (up 1.per cent to 104.1p) kept its franchise for the TransPennine Express – this time without partner Keolis – while German firm Arriva has beaten Dutch-owned rival Abe llio to the Northern rail franchise from April.

Transport Secretary Patrick McLoughlin said: ‘The last time these contracts were awarded, the Government did not plan for growth. We’ve put that right.’

Chancellor George Osborne said: ‘These new franchises are set to transform the connectivity, speed and capacity of rail services for families and businesses across the entire region.’

The Northern franchise is the second largest in the country and Arriva will invest £1billion, ditch the Pacers by the end of 2019 and invest £400million in 281 carriages.

FirstGroup has managed to hang on to the TransPennine Express and promises to invest more than £500million including introducing 220 new carriages valued at £400million.

FirstGroup will run the service for seven years, launch services for Scotland and boost capacity by 80 per cent, with connections between major cities up by 55 per cent.

Elsewhere, Perth-based transport group Stagecoach cut its full-year earnings forecast and shares fell 14 per cent to 304.7p.

It said revenue was hit by the terrorist attacks in Paris which discouraged people from travelling to major cities.

It posted a 27.5 per cent rise in half-year revenue to £1.97billion as pre-tax profit jumped 12 per cent to £121.5million. It increased its interim dividend by nearly 10 per cent to 3.5p a share.