Southeastern among franchises placed on public takeover watch list
The Southeastern franchise is one of six that could go the way of LNER and be taken over by the government as sources warned there was little time for a new operator to be appointed by April next year.
The bidding competition for the Southeastern franchise, which runs services between London, Kent and parts of East Sussex, was cancelled last week after the government said it was concerned the process would cost the taxpayer too much.
Read more: Scrapped: Government cancels bidding for Southeastern rail franchise
One source told City PM that a rail franchise typically takes 18 months to procure, shutting out the prospect of a new operator being appointed in April 2020, the government’s deadline.
The source also said there was no time for the alternative plan – issuing a direct award for the franchise from April next year – because that would require a one-year prior information notice, in which the government is supposed to provide advice about the next 12 months activity. No such notice has been issued.
The squeezed timeframe means that either an emergency direct award could be given to the current operator, Go Ahead, or the Operator of Last Resort (OLR), the function that allows the state to intervene in failed franchises at the last minute, could take over the line.
The source said the OLR had been “beefing up” its mobilisation team in the past six months and that there were now shadow teams for Southeastern and five other franchises – South Western (SWR), TransPennine Express (TPE), Northern, CrossCountry and c2c – in offices in Petty France near Whitehall.
A spokesperson for First Group, which operates SWR and TPE, said: “Under franchising arrangements, it is quite normal for the government to monitor and scrutinise all train operating companies, looking at a variety of factors.
“We have a leading market position in rail; have made £330m of profit over the last five years and will continue to operate our franchises, including TPE and SWR, according to their contractual terms.”
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A Department for Transport spokesperson said: “Options for the next South Eastern franchise will be developed and informed in a manner that puts passengers at the heart of the process. The department envisages these will be informed by the Williams rail review.”
The franchise model is the subject of a government-commissioned review led by former British Airways chief Keith Williams, who admitted last month that the system had “had its day”.
“What worked in the 25 years after privatisation is now holding the sector back. It hampers collaboration, stops the railway working as a system and encourages operators to protect narrow commercial interest above passengers,” he said at the time.
The Labour party’s policy on railways is to re-nationalise the railways, which Williams is not thought to favour.
Earlier today the shadow rail minister, Rachael Maskell, could not say how long it would take a Labour government to implement the policy.
Read more: Rail firms could seek costs after government scraps franchise competition
“We know we want to get on with this, we’re going to be impatient in government.”
When pressed again by Sky News on how long nationalisation would take, Maskell replied: “We’ll get on straight away with putting our railway system back together and our whole transport system…“It’s going to be straight away,” she added.