The Department for Transport will be responsible for running a third “privatised” rail franchise from next month following the announcement that it will take over the operation of Southeastern services from 17 October.
DfT said London and South Eastern Railway, which operates services between London, Kent and part of East Sussex under the Southeastern brand, was responsible for a “serious breach” of its franchise agreement because it failed to declare more than £25m in taxpayer funding due for return.
The department said the business – which is owned by Govia, a joint venture between Go-Ahead Group and French transport operator Keolis – had now paid back £25m of state funding, which covered a seven-year period. But it noted that investigations into “all related historic contract issues” were still ongoing and that the company could be hit with statutory financial penalties under the Railways Act 1993.
Southeastern will join Northern Rail and London and North Eastern Railway services in being operated by DfT under “operator of last resort” arrangements. LNER was created following the financial failure of the Virgin and Stagecoach-run East Coast franchise in 2018. The government took control of Northern Rail from franchise holder Arriva last year.
Transport secretary Grant Shapps said there was “clear, compelling and serious evidence” that London and South Eastern Railway had breached the trust that was “fundamental” to the success of the nation’s railways.
“When trust is broken, we will act decisively,” he said. “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.”
DfT said that ministers planned to “rapidly” progress the reforms established in the Plan for Rail, which would see services moved back into the private sector on a new passenger services contract, allowing private sector investment and innovation to “lead the way”.
Southeastern said all tickets would remain valid after its operations transferred to DfT and that new tickets could continue to be bought “in the usual way”.
In addition to Southeastern, the Govia joint venture between companies Keolis and Go-Ahead also holds the franchise that covers Thameslink, Southern, Great Northern and Gatwick Express services – a network that stretches from Norfolk to Hampshire and incorporates much of the South Coast.
Go-Ahead Group chair Clare Hollingsworth said in a statement: “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.”
Mick Lynch, general secretary of the National Union of Rail, Maritime and Transport Workers, called for a Serious Fraud Office investigation into privatisation of the rail industry.
“For years RMT has said that the private railways in Britain have been run by a gang of spivs trousering hundreds of millions of pounds of taxpayers money with impunity while services were left to rot,” he said. “Today's announcement on Southeastern proves we were right all along.”
“We do not believe for a moment that this scamming of the British people is restricted to Southeastern.
“There now needs to be a forensic examination of all the private rail contracts with those caught cooking the books called to account.
“It defies belief that even after this scandal was exposed that Govia are still running UK rail services. They should be kicked out and the whole network should be brought into public ownership.”