Passenger rail franchising in Great Britain was the system of contracting the operation of the passenger services on the railways of Great Britain to private companies, which was in effect from 1996 before being greatly altered in 2020, and effectively abolished in May 2021. In 2024 rail franchising was formally abolished, with rail contracts set to enter state control at the expiration of their contracts from 2025 onwards.
The system was created as part of the privatisation of British Rail, the former state-owned railway operator, and involved franchises being awarded by the government to train operating companies (TOCs) through a process of competitive tendering. Franchises usually lasted for a minimum of seven years and covered a defined geographic area or service type; by design, franchises were not awarded on an exclusive basis, and day-to-day competition with other franchises and open access operators was possible, albeit occurring on a limited number of services. Over the years, the system evolved, most notably reducing the initial 25 franchises to 17 through a series of mergers. As of October 2025, ten franchises are in state ownership under the DfT Operator with five more to follow in 2026, as more passenger services are gradually renationalised.
The Conservative government initially suspended rail franchising in order to maintain service as passenger demand fell due to the COVID-19 pandemic, but on 21 September 2020 permanently abolished the rail franchising policy, and put in place emergency arrangements which effectively converted the franchises into concession-based management contracts. The successor Labour government confirmed in 2024 that the train operating companies would be brought into state ownership as their contracts expired, a process that is expected to be complete by June 2027.
The system only covered the railways of Great Britain (including the Isle of Wight); the railways in Northern Ireland are owned and operated by the state-owned company NI Railways.
Process Tendering, monitoring and termination Railway franchises are decided by the UK Government's Department for Transport (DfT), who design the boundaries and terms of service, and award contracts to the train operating companies. Under the devolved administration arrangements, franchises for ScotRail and Caledonian Sleeper are awarded by Transport Scotland and the Wales & Borders franchise is awarded by Transport for Wales.
Prior to formally tendering a specific franchise, the DfT publishes a Prior Information Notice (PIN) outlining the basic details, and opens a consultation with relevant transport authorities, devolved administrations and the Transport Focus watchdog. At the end of this process, a formal Invitation To Tender (ITT) setting out the detailed terms of the proposed franchise agreement is sent to the three to five prospective bidders who have been identified as pre-qualified. ITT's may include a range of variations for consideration by the prospective bidder, who may also submit variations themselves. The franchise is awarded to the bid which is deemed most viable, and which offers the best value and reliability. If relevant, bidders' past performance is also considered.House of Common Briefing Paper SN6521 Railways: franchising policy, 30 September 2015, Louise Butcher
Performance is monitored throughout the contract period.
In contrast to earlier bail-outs, following the 2004 changes in approach to cost/revenue risk, unless there are exceptional circumstances, the DfT's policy toward failing franchises is not to rescue them with further financial assistance. Instead, DfT will hold them to the agreement and terminate the franchise early, and then run the franchise directly as an operator of last resort (OOLR), pending a re-tendering. Agreements also contain a cross-default clause, which allows other franchises also held by the company or an affiliate to be terminated.
Financing Rail franchise holders in Great Britain accept commercial risk, although there are clauses in newer franchises which offer some compensation for lower-than-expected revenue (and also claw back some excess profits, should these occur).
The main costs incurred by franchisees are track access charges (paid to Network Rail); other significant costs come from staffing, leasing stations (from NR) and rolling stock (from ROSCOs). Franchisees also pay for light maintenance of stock, with heavy work being done as part of the ROSCO lease. The main revenue stream is from fares, supplemented by the franchise subsidy in cases where there is a shortfall. In addition, franchisees are allowed to sub-let commercial units directly in leased stations.
Operators Privately operated The following national rail contracts are operated by private companies. +Privately operated national rail contracts in Great BritainFranchiseFranchise sinceOwnerStart dateCore term expiry dateOriginal end dateNationalisation dateEast Midlands11 November 2007East Midlands RailwayTransport UK Group18 August 201918 October 202613 October 2030Winter 2026 ()Greater Western1 April 2006Great Western RailwayFirstGroup1 April 200622 June 202525 June 202813 December 2026New CrossCountry11 November 2007CrossCountryArriva11 November 200717 October 202712 October 2031Autumn 2027 ()West Coast Partnership8 December 2019Avanti West CoastFirstGroup (70%)Trenitalia (30%)8 December 201918 October 202617 October 20327 March 2027 https://x.com/politlcsuk/status/2104258641146839212?s=46
Government owned The following services are operated by the UK, Welsh or Scottish governments. +Government owned train operating companies in Great BritainFranchiseFranchise sinceParentStart dateCaledonian Sleeper1 April 2015Caledonian SleeperScottish Rail Holdings25 June 2023Chiltern21 July 1996Chiltern RailwaysDfT Operator20 September 2026Essex Thameside26 May 1996c2cDfT Operator20 July 2025East Anglia1 April 2004Greater AngliaDfT Operator12 October 2025InterCity East Coast28 April 1996London North Eastern RailwayDfT Operator24 June 2018Northern1 April 2016NorthernDfT Operator1 March 2020ScotRail31 March 1997ScotRailScottish Rail Holdings1 April 2022South Eastern1 April 2006SoutheasternDfT Operator16 October 2021South Western20 August 2017South Western RailwayDfT Operator25 May 2025Thameslink, Southern and Great Northern14 September 2014Greater Thameslink RailwayDfT Operator31 May 2026 Transfer of Govia Thameslink Railway’s services into public ownership Gov.ukTransPennine Express1 February 2004TransPennine ExpressDfT Operator28 May 2023Wales & Borders14 October 2001Transport for Wales RailTransport for Wales7 February 2021West Midlands10 December 2017West Midlands TrainsDfT Operator1 February 2026
Concessions A small number of urban railway systems are not franchised but are contracted out as a concession instead. Concession holders are paid a fee to run the service, which is usually tightly specified by the awarding authority. They do not take commercial risk, although there are usually penalties and rewards specified in the contract for large variations in performance.
+Rail concessions in Great BritainConcessionOperator(s)Start dateEnd dateAuthorityElizabeth lineGTS Rail Operations25 May 2025May 2032TfLDocklands Light RailwayKeolisAmey 70%:30%7 December 2014"French firm wins 7-year Docklands Light Rail franchise". BBC News. 4 July 2014. 31 March 2033TfLLondon OvergroundFirst Rail London 3 May 20262034TfLManchester MetrolinkKeolisAmey 60%:40%15 July 2017KeolisAmey Awarded Contract to run Greater Manchester's Metrolink KeolisSouthern Rail operator to take over running of Metrolink Manchester Evening News 18 January 2017July 2027TfGMMerseyrailMerseyrail Electrics 200223 July 200319 July 2028Merseytravel
The South Yorkshire Supertram was operated under a concession by Stagecoach until March 2024, when it was taken back into public control by the South Yorkshire Mayoral Combined Authority.
Open-access operators An open-access operator is a train operating company that is not subject to franchising or concessions, but instead purchases individual train paths from a railway infrastructure company such as Network Rail. These operators include Eurostar, Grand Central, Heathrow Express, Hull Trains, Lumo and Pre Metro Operations (providing a shuttle service on the Stourbridge Town branch line).
Former franchises Prior to privatisation, the passenger services of British Rail were organised into three units: InterCity for long-distance express services Network SouthEast (NSE) for commuter services across East and South East England into the various London termini Regional Railways (RR) for services in all other areas
They then underwent further reorganisation in preparation for franchising, being split up into 25 train operating units (TOUs) that were gradually incorporated as separate businesses. These operated as 'shadow franchises' that negotiated contracts individually with regulators, Railtrack (the infrastructure and major station owner) and ROSCOs (the rolling stock leasing companies) before being sold off in 1996 and 1997.House of Common Briefing Paper SN1343 Railway passenger franchises, 14 December 2015, Louise Butcher