Passengers let down
National Audit Office report says TSGN franchise has not delivered value for money to the Government.
GOVERNMENT has not received value for money from the Govia Thameslink Railway (GTR) concession, according to a National Audit Office report published on January 10.
In its report into the Thameslink, Southern and Great Northern franchise (TSGN), NAO said: “The Thameslink programme has a realistic chance of achieving value for money and the return to the Department [for Transport] from the franchise has broadly met its expectations. However, passengers have suffered periods of significant disruption during the first three out of seven years of the franchise.
“While industrial action has been a major contributor to disruption, on a scale which would have been difficult for the Department to foresee, the Department did make decisions on this franchise, the cumulative effects of which have negatively impacted on passengers. We cannot therefore conclude that the Department has to date achieved value for money from this franchise.”
Between September 2014 and August 2017, DfT received £3.6 billion in fare revenue, broadly in line with its expectations. It made franchise payments to GTR of £2.8bn, meaning a return of £760 million for the taxpayer, net of £33m of passenger refunds paid by the Department for Transport.
NAO said GTR had not earned profits expected on this deal to date. It has incurred £5.25m losses after tax over three years. At this point a forecasted profit of £130m was expected.
This was attributed to: GTR underestimating costs in its bid, including Network Rail charges and cost of drivers; unrealised efficiency savings; financial penalties from DfT based on poor performance; GTR adding extra operational managers to deal with timetable changes and performance issues; and interim staff hired to deal with London Bridge disruption and delayed modernisation plans.
NAO also highlighted that during the bidding process, concerns had been raised by Network Rail regarding the timetable plans put forward by Govia (see panel).
NAO Head of Office Amyas Morse said: “Over the last three years, long-suffering passengers on the Thameslink franchise have experienced the worst performance on the rail network. Some of the problems could have been avoided if the Department had taken more care to consider passengers in its design of the franchise.”
GTR Chief Executive Charles Horton said the company was “making good progress” in delivering a major upgrade, adding: “We are glad that the National Audit Office has recognised these passenger benefits and that they forecast Thameslink has a realistic chance of delivering value for money.”
Horton said the report identified numerous root causes for the challenges faced, some of which were greater than expected. “It is only right that a franchise of TSGN’s unprecedented scale and ambition receives scrutiny, and I am more confident than ever that its trailblazing achievements will be felt by rail travellers for generations to come.”
The report highlighted that over three years passengers have suffered higher levels of disruption than on any other operator. Since GTR took over Southern in July 2015, NAO said around 146,000 services (7.7% of planned services) had been either cancelled or delayed more than 30 minutes. This compares with 2.8% for the rest of the UK network.
It said around 56,000 cancellations (38%) were train crew or driver-related, with suggestions from DfT and GTR that this was largely down to industrial action. It said NR had been responsible for 37% (54,000) of all cancelled services.
Since the start of 2017 this has improved, with NAO reporting that since March 80% of trains have arrived within five minutes of their scheduled time. On Southern (57%
of all GTR services), performance corresponds closely with Thameslink, while Great Northern (16% of GTR) performs the best. The worst performer is Gatwick Express (4% of GTR), which suffers when there are performance problems because other services are given priority.
The deal is worth £8bn over seven years. Govia started running the franchise in September 2014, and it is due to end in September 2021. Five companies bid for the deal, with Govia scoring the highest for its proposals on service quality and the lowest cost to run the franchise.
The NAO confirmed that DfT did consider ending the deal early in late 2016 and early 2017, but there were insufficient grounds to do this.
Transport Select Committee Chairman Lilian Greenwood said: “Despite assurances to contrary at the start of this contract in 2014, the interests of passengers were far from the heart of the DfT’s decision-making.
“The Department chose to protect GTR from substantial revenue losses and, despite the sometimes appalling levels of service, achieved a return to the taxpayer. The Department got the balance of risk badly wrong to the harsh detriment of passengers, and as the Transport Committee said in 2016, this debacle must never be repeated.” She said it was time for DfT to take on board TSC and NAO conclusions regarding GTR.
RMT General Secretary Mick Cash called GTR “a scandal”, adding that the NAO report blows open “the scale of Government collusion with the private train operators, which has bled the taxpayer dry while giving this basket-case operation a free hand to slash staff and run services into the ground”. He said GTR should be stripped of the franchise and returned to public ownership. Anything else, he said, would be “a cop out”.
ASLEF General Secretary Mick Whelan said: “Passengers have suffered, totally unnecessarily, and taxpayers have had to pick up the bill. The company got it totally wrong - with the connivance of the DfT. Now we want heads to roll.”
London TravelWatch Chief Executive Janet Cooke said: “In the longer term, there is a real need for the Department for Transport to focus on lessons that need to be learned and applied when designing rail franchises. Passengers should not be used as ‘guinea pigs’ in this way again to force through new ways of working.”
A DfT spokesman told RAIL: “The NAO report confirms that the primary cause of delays and cancellations to passengers has been lack of available staff, which is a direct result of strike action. It is time for the RMT to call off its needless strike action.
“Clearly the disruption passengers have experienced is unacceptable, but the NAO recognises that service has improved over the last 12 months. The Government has taken a number of steps to ensure this improvement, including the provision of an additional £300 million to improve reliability on the Brighton Main Line. We expect service improvements to continue as the Thameslink programme is completed.”