Govia keeps rail fran­chise with deal to spend £15m on ser­vices

The Daily Telegraph - Business - - Business - By Oliver Gill

GOVIA Thames­link Rail­way (GTR) will keep Bri­tain’s big­gest rail fran­chise but will pay out £15m to im­prove ser­vices af­ter its “un­ac­cept­able per­for­mance” con­trib­uted to a bun­gled timetable roll-out ear­lier this year.

GTR’s par­ent com­pany Go-Ahead an­nounced yes­ter­day that it had struck a deal with the Depart­ment for Trans- port (DfT) that means it will hang on to the South East rail net­work, but will have to fund “pas­sen­ger en­hance­ments” this year.

The DfT con­cluded that a ter­mi­na­tion of the fran­chise “would cause fur­ther and un­due dis­rup­tion for pas­sen­gers and is not an ap­pro­pri­ate course of ac­tion”.

How­ever, Go-Ahead re­vealed that its over­all prof­its would not be knocked off course by the Gov­ern­ment sanc­tions, spark­ing anger among rail users who sug­gested that the de­ci­sion by Chris Grayling, the Trans­port Sec­re­tary, was a “white­wash”. Fears were raised ear­lier this year that Govia, a joint ven­ture be­tween Go-Ahead and French state-backed com­pany Ke­o­lis, could lose the GTR con­tract af­ter a botched timetable shake-up left pas­sen­gers stranded amid nu­mer­ous can­cel­la­tions.

Un­der the new agree­ment, GTR will not be al­lowed to make a profit from the fran­chise for the re­main­der of the fi­nan­cial year. The amount of profit that the group can make will also be capped un­til the end of the fran­chise, which runs un­til Septem­ber 2021.

Profit mar­gins on the fran­chise will now be be­tween 0.75pc to 1pc, com­pared with a pre­vi­ous range of 0.75pc to 1.5pc. De­spite this, Go-Ahead said its “full year ex­pec­ta­tions for the cur­rent fi­nan­cial year re­main unchanged”. The com­pany ex­pects to make £96.1m of pre-tax profit this year.

Emily Yates, co-founder of the As­so­ci­a­tion of Bri­tish Com­muters, said: “To­day we’ve wit­nessed yet another white­wash on the GTR con­tract. The £15m ‘im­prove­ment pack­age’ an­nounced to­day closely re­sem­bles last year’s bail-out of GTR by the Gov­ern­ment, which let them buy out their li­a­bil­ity for per­for­mance.

“That scan­dalous de­ci­sion now means that GTR will go mostly un­pun­ished for the May timetable col­lapse.”

Lil­ian Green­wood, chair­man of the trans­port select com­mit­tee, which pub­lished a re­port into the timetable chaos this week, said: “Our re­port said the DfT was com­pla­cent in its at­ti­tudes to­wards [pas­sen­gers] and still to­day, the Sec­re­tary of State hasn’t got the mes­sage.”

Shares in the FTSE 250 com­pany closed down 1.8pc at £16.12.

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