The new franchise starts in the autumn

The venture by Serco Group and Dutch company NedRailways BV has been picked by the Strategic Rail Authority (SRA) ahead of First Group.

The franchise covers services including those to Leeds, Liverpool, Manchester, Newcastle-upon-Tyne and Sheffield.

The service starts in the autumn and will run until 2013.

Targets reached

The new franchise includes the old North Western area which First Group used to run and includes 475 stations and 4,000 staff.

The SRA says it will keep a careful eye on the performance of the new franchise, and its final two years will depend on it reaching targets.

The Serco-NedRailways partnership also runs the Merseyrail franchise.

First operates a number of franchises including Great Western and the New TransPennine franchise.

Dutch operator

NedRailways BV is the Dutch rail operator and Serco runs the Manchester Metrolink, the Copenhagen Metro and the Ghan and Indian Pacific railways in Australia.

FirstGroup chief executive Moir Lockhead said his company was disappointed not to have won the contract.

"We put in a very strong and competitive bid for this franchise, which we believe would have offered value for both passengers and our shareholders," he said.

"We wish the new Northern franchisee well and look forward to bidding for both the Inter City East Coast and Integrated Kent franchises."

Serco Group chief executive Christopher Hyam said: "We are delighted to be selected.