The Department for Transport has announced that Stagecoach Midland Rail Limited (a subsidiary of Stagecoach Group plc) has been awarded the contract to run the new East Midlands franchise from 11 November 2007.

The new franchise is a combination of the existing Midland Mainline services from London St Pancras and the eastern section of Central Trains. Over the life of the franchise, seven years and four months, the DfT will receive a premium of £133m from Stagecoach Midland Rail Limited.

Passengers will benefit from improvements including:

* A new hourly service between Kettering and London, increasing the number of off peak services on the midland main line to five trains per hour. It has also been agreed in principle to extend this service to a new station at Corby from December 2008. This removes the need to split and join trains at Leicester.

* A 9% increase in peak capacity into and out of London St Pancras by 2010, and more carriages on the busiest trains between Nottingham and Liverpool.

* The new station at East Midlands Parkway will be served by two trains an hour from December 2008, and a daily direct service between Lincoln and London will be introduced.

* Journey times between Sheffield, Derby and London will be reduced, saving up to 12 minutes on an average journey between London and Sheffield.

* Improved performance, with a forecast 90.4% of trains on time by the end of the franchise.

* The Community Rail service between Matlock and Derby will be increased to every hour and extended directly to Nottingham.

* More investment including more than £5m on improvements to stations, at least 1250 extra car parking spaces and the introduction of smart card technology by 2010.

Rail Minister Tom Harris said: "This agreement will increase value for money, improve performance and accommodate future growth in demand. From new and faster services to increased security at stations, I am pleased that this new franchise will deliver so many benefits to passengers in the East Midlands."

The Government will continue to limit annual rises of regulated fares in line with national policy, which is currently RPI+1%. As with all franchises, unregulated fares will be the responsibility of the operator. Stagecoach Midland Rail Limited have indicated they may wish to raise unregulated fares annually by an average of 3.4% above inflation.

Notes

* The award of the new franchise was announced to the London Stock Exchange at 7am today.

* New services will be introduced as part of a new timetable from December 2008.

* Market Harborough will continue to receive a two-train per hour service all day.

* A single compensation policy for all passengers will be introduced during the term of replacement rail franchises, commencing with the East and West Midlands. With improving Passenger's Charter performance in punctuality and reliability the current discount system means that an increasing number of passengers receive no compensation for delays.

Therefore discounts in renewal for season tickets valid between one month and one year in compensation for poor punctuality and reliability will be replaced by compensation based on delays to individual journeys, known as Delay/Repay. Under the new system, all passengers will be entitled to claim compensation for all delays, whatever their cause.

* 50% of the price paid for a single-leg journey delayed by between 30 and 59 minutes;

* 100% of the price paid for a single-leg journey delayed by between 60 and 119 minutes; and

* 100% of the price paid for a return journey delayed by more than 119 minutes.

The changes will also start to standardise disparate compensation arrangements for single, return and weekly season ticket holders on different train operators.

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National Express Group, the present operators of the MML and Central Trains franchise issued the following announcement.

National Express Group PLC (“the Group”) notes today’s announcement from the Department for Transport (“DfT”) advising on the award of the East Midlands rail franchise.

Commenting on the announcement, Richard Bowker, Chief Executive, said: “We are very disappointed with today’s announcement. We look forward to the DfT explaining the reasons for their decision.“I would like to take this opportunity to thank all our employees at Midland Mainline and Central Trains. Midland Mainline?s record of constant improvement has resulted in the company being top of industry league tables for operational performance as well as customer satisfaction, a record of which we are truly proud.The team at Central Trains have shown what can be achieved in a difficult franchise with the right people and the right focus.”