Southeastern rail taken over by Government after ‘serious breach’ of franchise agreement

The Government will take over the running of Southeastern rail services following a “serious breach” of its franchise agreement, Transport Secretary Grant Shapps announced on Tuesday.

In a surprise move, Mr Shapps ordered the train company to be taken over by the Government’s Operator of Last Resort after an investigation by the Department for Transport (DfT) found evidence it had not declared more than £25m of taxpayer funding.

The decision will take effect from October 17 although the Government stressed the decision would have no impact on services, tickets or fares. Southeastern is the key operator of commuter and regional services in South East London and Kent, and also serves parts of East Sussex.

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.

Train operator Southeastern has been stripped of its franchise after failing to declare more than £25 million of taxpayer funding, the Department for Transport has announced (Gareth Fuller/PA) (PA Archive)

“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.”

In a statement Go-Ahead, the company which has the contract to run Southeastern, said it was “naturally disappointed” by the Government’s decision but acknowledged mistakes had been made. It said it had repaid the £25m identified by the DfT.

“The Board of Go-Ahead regrets to announce that the Department for Transport has chosen to appoint the Operator of Last Resort (OLR) to take over delivery of passenger services on the Southeastern franchise from 18 October 2021, when our existing agreement expires. While the Group is naturally disappointed by this, the decision relates only to Southeastern. Our other rail business, GTR, is not affected.”

The statement added: “Although the independent review is ongoing and the contracts concerned are highly complex, the Group acknowledges that errors have been made in relation to the franchise. The Group has repaid the £25 million referred to in the DfT’s statement of this morning.”

Go-Ahead Chair, Clare Hollingsworth, said: “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.”

Southeastern becomes the third rail franchise to be placed under the control of the Operator of Last Resort following earlier moves to place London North Eastern Railway and Northern under the stewardship of the Government.

The DfT said the breach related to taxpayer money paid to LSER as a fee for running services on the HS1 route – the high speed link between St Pancras Station and the Channel Tunnel.

In its statement it added that further investigations are being conducted by the owning group into all related historic contract issues with LSER.

The decision to place Southeastern under government control comes as the DfT looks to implement its major overhaul of the UK’s railways, outlined in the Williams-Shapps review published in May.

Under that plan, Britain’s trains will continue to be operated by private companies but the railways will be overseen by a new body called Great British Railways.

Separately ministers are currently looking to unwind emergency operating agreements introduced over the past 18 months to prop up struggling train operators during the Covid-19 pandemic.

Officials said evidence of the £25m breach came as the Government negotiated with LSER over a new operating contract, due to start next month.

The RMT rail union called for a full rail nationalisation. General Secretary Mick Lynch said: “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.”

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