DFT strips Govia of its Southeastern franchise

THE DEPARTMENT for Transport (DFT) announced on September 28 that an Operator of Last Resort, SE Trains Limited, was being brought in from October 17 to take over the operation of Southeastern.

The move follows an investigation into Southeastern’s trading company, London & South Eastern Railway (LSER), which identified more than £25 million of taxpayers’ money was not declared by LSER, creating a breach of trust in the franchise agreement.

LSER has been operating the Southeastern franchise since 2006 between London, Kent and parts of East Sussex. It is owned by Govia, a joint venture between the Go-ahead Group and Keolis.

A DFT statement declared: “To date, £25 million has been reclaimed and further investigations are being conducted by the owning group into all related historic contract issues with LSER. Following these investigations, the Government will consider further options for enforcement action, including statutory financial penalties under the Railways Act 1993.

“On the basis of the available evidence, we consider this to be a significant breach of the good faith obligation within the franchise agreement and will not be extending a further contract to LSER. The Government believes it is essential that there is public trust in operators, who should prioritise the very best for passengers.

“Given the Government’s commitment to protecting taxpayers’ interests, this decision makes clear that we will hold private sector operators to the highest standards and take swift, effective and meaningful action against those who fall short.” A new company, SE Trains Limited, assumed responsibility for the franchise from October 17. SE Trains Limited is a wholly owned subsidiary of DFT OLR Holdings Limited (DOHL), the Public Sector Owning Group also responsible for LNER and Northern Trains.

Transport Secretary Grant Shapps said: “There is clear, compelling and serious evidence that LSER has 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 it unequivocally clear that we will not accept anything less from the private sector than a total commitment to their passengers and transparency with taxpayer support.”

The transfer of Southeastern to an Operator of Last Resort (OLR) is now the third passenger operation to have been taken into government control, but the first to be stripped as a result of a breach of trust.

LNER took over the Virgin Train East Coast franchise in June 2018 after the Virgin and Stagecoach partnership got into financial difficulties due to lower-than-expected passenger revenues, while Arriva was stripped of the Northern franchise in March 2020 after a host of poor performance issues plagued the operator.

As with the other franchises to have been transferred to an OLR, the DFT has been keen to stress that passengers and front-line staff should not notice any difference in services, fares and tickets available on the Southeastern network.