Risk sharing mechanism for GA and SW franchises

Government has inserted Central London Employment (CLE) mechanisms in the Greater Anglia and South Western franchises, in the event of a downturn in employment in central London.

Shadow Transport Secretary Andy McDonald had asked what adjustment mechanisms were in place. In a Commons Written Reply on February 23, Rail Minister Jo Johnson wrote: “The CLE mechanism is a risk sharing mechanism where if employment increases significantly above previous expectations, DfT gets a share of the increased revenue the additional employment generates; and if it decreases to significantly below previous expectations DfT shares in the loss of revenue with the operator.”

Abellio was awarded the Greater Anglia franchise in August 2016, while MTR/FirstGroup was awarded the South Western deal last year.