The government takes over the management of southeast rail services from Go-Ahead after discovering a “serious” violation of the franchise agreement.
Transport Secretary Grant Shapps said a Department of Transport investigation found that since October 2014 Southeastern had not declared more than £ 25million in historic taxpayer funding that should have been returned, and described this as a serious breach of the “good faith obligation” franchise agreement.
He said the money had been recovered and further investigations were underway into all historic contractual issues related to the franchise. Following these inquiries, the government will consider other options for enforcement action. It is understood that the matter could be examined by the Serious Fraud Office.
Southeastern owner Go-Ahead said “although the contracts involved are very complex” he “acknowledges that mistakes were made with regard to the franchise” and that the £ 25million has been repaid.
Shapps said: “There is clear, compelling and serious evidence that for years London and South Eastern Railway Services have broken the trust which is absolutely fundamental to the success of our railways. When trust is broken, we will act decisively.
The franchise will be managed by the government’s internal operator of last resort – the railway managers who already oversee the London North Eastern Railway and the Northern Railway – from October 17.
Shapps said the move would not affect jobs and that fares, tickets and services would remain the same for passengers.
Southeastern is managed by Govia and operates services throughout the South East of England, covering London, Kent, East Sussex and the High Speed 1 lines. It employs 4,000 people.
Go-Ahead Group President Clare Hollingsworth said: “It has always been our intention to provide the best public transport possible and to work in partnership with government and relevant agencies. We recognize that mistakes were made and we sincerely apologize to the DfT. We are working constructively with the DfT towards a settlement of this matter. “
Go-Ahead said he was postponing his results for the year to July 3, which was slated for Thursday. Its chief financial officer, Elodie Brian, is to retire with immediate effect after two years in office and 13 years in the company.
The government’s decision leaves the group with GTR (Govia Thameslink Railway), which operates Thameslink, Southern, Great Northern and Gatwick Express services. GTR and Southeastern are both headed by Govia, a joint venture with French firm Keolis, dominated by Go-Ahead with a 65% stake.
Go-Ahead also operates trains in Germany and Norway and is the largest bus operator in London.