The company said the new franchise – which covers the London to Northampton routes of the current Silverlink County franchise, much of the Central Trains franchise and will also include some new services – would generate revenue for GoVia of around £400m in its first full year.

However, the franchise terms are likely to provoke further controversy over the government’s fares policy after the government said the new operator would be allowed to increase fares between London and Northampton annually by three percentage points above inflation.

GoVia’s only other current franchise is SouthEastern Trains, which runs services around south-east London, Kent and East Sussex. The minority stake in the company is held by France’s Keolis, which is controlled by SNCF, the French state train operator. The services will run under the London Midland brand.

GoVia defeated a joint venture between Serco and the Netherlands’ NedRail to win the franchise. The only other qualified bidder, Hong Kong’s MTR Corporation, dropped out.

The franchise will run from November 11 this year until September 2015, with the last two years dependent on GoVia meeting set performance targets. The service will receive subsidy worth £1.13bn at present prices.

Keith Ludeman, Go-Ahead’s chief executive, said the company was delighted to have been chosen.

He said: “Our winning bid contains a range of high quality and value-for-money initiatives which will completely transform passengers’ travelling experience.”

The fare increase on the London to Northampton route marks the latest of several occasions when the government has allowed winning bidders of rail franchises to increase fares by more than the standard one percentage point above annual inflation.

The policy – which has never been formally spelt out – appears aimed at meeting the sharply rising cost of maintaining the railway infrastructure and has been implemented mostly on London orbital commuter routes, where demand is heaviest and price increases are least likely to drive passengers to use cars.

The West Midlands franchise will also see changes to refund arrangements for season ticket holders, with travellers receiving refunds only if the actual train they used was delayed, rather than for overall poor service punctuality. The move – which will be made possible by new smart card technology – looks set sharply to reduce the refunds season ticket holders receive.