Government takes over Southeastern rail firm after £25million breach of franchise deal

The Government is to take over train operator Southeastern after a ‘serious breach’ of its franchise agreement.

Transport Secretary Grant Shapps said an investigation by his department identified evidence that since October 2014 the company has not declared more than £25 million of historic taxpayer funding which should have been returned. 

Further investigations are being conducted and the Government said it will consider options for more action, including financial penalties. 

Senior bosses have now been removed from their positions, according to ministers. They also stressed the announcement will have no impact on frontline staff.

‘The decision is no reflection on their professionalism and dedication and will not affect jobs,’ said the Department for Transport. 

Southeastern is run by Govia, a joint venture between transport operators Go-Ahead (65%) and Keolis (35%), and operates services across south-east England, covering London, Kent, East Sussex and the High Speed 1 Lines. 

A brief statement on Southeastern’s website said: ‘Our passengers will see no change in our day-to-day operations. All tickets will remain valid after transfer and new tickets can continue to be purchased in the usual way.’

Mr Shapps said: ‘There is clear, compelling and serious evidence that LSER have breached the trust that is absolutely fundamental to the success of our railways. When trust is broken, we will act decisively.

‘The decision to take control of services makes unequivocally clear that we will not accept anything less from the private sector than a total commitment to their passengers and absolute transparency with taxpayer support.

‘Under the new operator, we will prioritise the punctual, reliable services passengers deserve, rebuild trust in this network, and the delivery of the reforms set out in our Plan for Rail – to build a modern railway that meets the needs of a nation.’

Go-Ahead Group’s chairwoman Clare Hollingsworth said: ‘It has always been this group’s intention to provide the best possible public transport, and to work in partnership with the Government and related agencies.

‘We recognise that mistakes have been made and we sincerely apologise to the DfT. We are working constructively with the DfT towards a settlement of this matter.’

The group said the release of its results for the year ended July 3 2021, scheduled for September 30, has been postponed.

The group also announced that Elodie Brian has resigned as group chief financial officer and will be standing down from the board with immediate effect.

Conservative MP Huw Merriman has said a need for ‘confidence in our railways’ has likely led the Government to take action against Southeastern Railways.

Asked about the situation on BBC Radio 4’s Today programme, he said: ‘This has just been announced at 7 o’clock and I understand the Serious Fraud Office will be involved in this, so there is a limit to what I can say.

‘It is my own constituency train operator. I have a season ticket with Southeastern.’

The chair of the Transport Committee added: ‘It won’t make any difference for me as a passenger, the same lovely staff will still drive us where we need to go, the trains will still look the same, but the senior management has been removed.

‘The Government will have had two options here, one just to accept some explanations and an inquiry, or take decisive action to remove the train operation in its entirety.

‘I can understand why the Secretary of State and the rail minister will have done this, because we need confidence in our railways right now, and if there appears to be evidence of wrongdoing, then it is right to sweep away.’

Southeastern has been running the train service between London and Kent and parts of East Sussex since 2006, operating one of the busiest networks in the country including the UK’s first domestic high-speed service with Javelin trains. 

The company employs 4,000 workers and runs more than 2,000 services on weekdays.

It has almost 400 trains and serves 180 stations.

Southeastern’s latest contract started in April 2020, running until October 16, with the option to extend at the Department for Transport’s discretion until March 2022.

During the course of the contract term, Southeastern said it would deliver a range of ‘customer experience improvements’ including exploring options to boost capacity as additional rolling stock becomes available.

Manuel Cortes, general secretary of the Transport Salaried Staffs Association said: ‘The days of rail franchising must now be well and truly over. Time and time again we see the private sector fail and taxpayers ride to the rescue.

‘We need the Government to dump the failed franchise system, end the profiteering of the train operating companies and take over the whole thing, lock stock and rails.

‘There’s no time to wait for the implementation of the half-baked Williams-Shapps plan, or so-called Great British Railways pie in the sky from this Tory Government.

‘Our union will now be seeking assurances that this mess in no way impacts our members’ jobs because so many of them have been true heroes on the frontline of the pandemic since day one.

‘Passengers at Southeastern and right across our rail network need services they can trust and a railway that works for them, rather than private profit.’

The RMT rail union called for a full rail nationalisation as Southeastern was taken over by the Government.

General Secretary Mick Lynch said: ‘This latest public sector rescue of a privately operated rail service should kill off the risky and expensive nonsense of rail privatisation once and for all.

‘It appears that this collapse is all about Govia playing fast and loose with their financial commitments and raises serious questions about the viability of their other operations including the busy Thameslink services.’

He added: ‘It’s time to put the rest of Britain’s failing private rail operations out of their misery, cut out the middleman and build a public railway that’s fit for a green, post-Covid future.’