§ Mr. Jim CunninghamTo ask the Secretary of State for the Environment, Transport and the Regions if the planned reduction of public service obligation grants to TOCs outlined in the franchise agreements will continue regardless of the financial circumstances of the TOCs. [40259]
§ Ms Glenda JacksonSupport payments from the Franchising Director to the TOCs are contractually committed payments as set out in the franchise agreements. Franchise agreements are legally enforceable contracts. Franchise payments are variable only in circumstances prescribed in the franchise agreements; for example, where performance penalty or bonus payment are applicable or changes are made to the Passenger Service Requirement. A franchise operator may seek change to the terms of the franchise agreement if its financial viability is at risk. The Franchising Director has discretion to provide additional subsidy or not but would be under no obligation to do so. Insolvency is an event of default under the franchise agreement for which the Franchising Director may terminate the agreement. In the event of termination of a franchise agreement the Franchising Director has a statutory duty under S30 of the Railways Act 1993 to secure the provision of services for which no further franchise agreement has been entered into, and the railway administration provisions of the Act would ensure that the assets required for the provision of services continue to be available. The franchise agreements also provide for franchises to post a performance bond which could be claimed by the Franchising Director in these circumstances.