Southeastern accused of acting "in bad faith" by DfT

[whole diary]

[stuving]

From the BBC^» (British Broadcasting Corporation - home page):

Southeastern: Government takes over services after 'serious breach'

The government has stripped rail operator Southeastern of its franchise after "a serious breach of good faith".

Transport Secretary Grant Shapps said more than £25m of historical payments due to the Department for Transport were not paid.

He said the Operator of Last Resort would take over the running of rail services in the south east to protect taxpayers' interests.

Southeastern said passengers would see no change in day-to-day operations.

Mr Shapps said: "We won't accept anything less from the private sector than a total commitment to their passengers, and transparency with taxpayers.

"Through the Operator of Last Resort we'll prioritise the punctual, reliable services passengers deserve."

Bexhill and Battle MP^▸ (Member of Parliament) Huw Merriman, who chairs the Transport Select Committee, told the BBC: "I understand the Serious Fraud Office will be involved in this, so there is a limit to what I can say."

He said: "We need confidence in our railways right now, and if there appears to be evidence of wrongdoing, then it is right to sweep away."

The Serious Fraud Office said: "We are aware of the matter but can neither confirm nor deny interest."
...

That sounds like some seriously over-creative accounting.

[ChrisB]

Works out at £3m/year…seems to be a (small) singke revenue stream thatcwasn’t being divvied up….

Was Go-Agead (parent conpany) aware? Either way, calls into question their corporate governance & could lead to losing their GTR contract, possibly. Hence LSERs statement that it only affected Southeastern

[grahame]

Tweet by Grant Shapps:

Investigations have identified a serious breach of good faith by Southeastern.

To protect taxpayers’ interests and passengers I have ordered the Operator of Last Resort to urgently take over the running of rail services in the South East.

Over £25m of historic payments due to the Department were not declared - a significant breach of the franchise agreement.

We won't accept anything less from the private sector than a total commitment to their passengers, and transparency with taxpayers.

Fares, tickets and services are unchanged for passengers. Through the OLR we’ll prioritise the punctual, reliable services passengers deserve, rebuild trust, and deliver the reforms set out in our #PlanForRail.

[Electric train]

Works out at £3m/year…seems to be a (small) singke revenue stream thatcwasn’t being divvied up….

Was Go-Agead (parent conpany) aware? Either way, calls into question their corporate governance & could lead to losing their GTR contract, possibly. Hence LSERs statement that it only affected Southeastern

From the BBC^» (British Broadcasting Corporation - home page) News website  - Go-Ahead announced Elodie Brian has resigned as group chief financial officer and will be standing down from the board with immediate effect.

Go-Ahead Group's chairwoman Clare Hollingsworth said: "We recognise that mistakes have been made and we sincerely apologise to the DfT^» (Department for Transport - about). We are working constructively with the DfT towards a settlement of this matter".

[ChrisB]

That could be simply because she missed the revenue stream calculation, rather than a deliberate choice to keep the money though.

Still means their internal audit wasn't up to scratch in picking this up though - hence my comment about corporate governance performance. They could still lose GTR I reckon - and I suspect Keolis might have a claim too (30% interest in LSER (London & SE Railway) - they've be expecting at least a Direct Award contract ongoing.....

[broadgage]

That could be simply because she missed the revenue stream calculation, rather than a deliberate choice to keep the money though.

Still means their internal audit wasn't up to scratch in picking this up though - hence my comment about corporate governance performance. They could still lose GTR I reckon - and I suspect Keolis might have a claim too (30% interest in LSER (London & SE Railway) - they've be expecting at least a Direct Award contract ongoing.....

I very much doubt that this was a mistake.
Surely in the event of a suspected mistake, those due to receive the money would say "We believe that your calculations are in error, and that you owe us XX million"
And that those due to pay the money would say "We are very sorry and will pay up" The fact that this went on for some years suggests that the TOC^▸ (Train Operating Company) were asked repeatedly for the money and declined to pay.

[eightonedee]

And that those due to pay the money would say "We are very sorry and will pay up" The fact that this went on for some years suggests that the TOC^▸ (Train Operating Company)▸ were asked repeatedly for the money and declined to pay.

Not necessarily, my guess is that someone may have been aware that they owed the money to  DfT^» (Department for Transport - about) which DfT overlooked and they were happy to keep stum for years and keep the cash. It fits the "breach of good faith" label attached to it. If it was money known to be owed DfT would have been able to collect (or terminate for non-payment) as soon as it was overdue by the contractual period of grace.

Sadly, this is not unkown dealing with government departments, but it is often outsiders owed money who suffer when somone in a department or agency "loses the file" (ask any farmer about the Rural Payments Agency).

[Celestial]

The Group CFO who has resigned was CFO of Southeastern when much of this was going on. So it is going to be a tough call to persuade the DfT^» (Department for Transport - about) that Group management haven't known about this for some time. 

[Electric train]

Just a guess but I think it will remain with the 'operator of last resort' until GBR^▸ (Great British Railways) is in place, I am certain the DfT^» (Department for Transport - about) will just not want to go through a franchise process especially as the Southeastern refranchise has failed twice in the recent past.

I also expect the Mayor for London to call again for the SE Metro services to be taken over by TfL^» (Transport for London - about)

[ChrisB]

Speculation amongst the railway press today that TfL^» (Transport for London - about) may be given the whole of their network as part of their next funding in December. It’ll be interesting to see Khan’s reaction

[grahame]

Speculation amongst the railway press today that TfL^» (Transport for London - about) may be given the whole of their network as part of their next funding in December. It’ll be interesting to see Khan’s reaction

So we will have stations like London (Margate) to confuse with London (Moorgate), and plastic card oysters to replace edible ones in Whitstable.

[Trowres]

Through the OLR we’ll prioritise the punctual, reliable services passengers deserve, rebuild trust, and deliver the reforms set out in our #PlanForRail.

A bit different from your actions through SWR^» (South Western Railway - about) on the Waterloo-Bristol services, then?

[TaplowGreen]

Speculation amongst the railway press today that TfL^» (Transport for London - about) may be given the whole of their network as part of their next funding in December. It’ll be interesting to see Khan’s reaction

So we will have stations like London (Margate) to confuse with London (Moorgate), and plastic card oysters to replace edible ones in Whitstable.

TfL are doing an excellent job out this way in the Thames Valley - stations/reliability/capacity/regularity/customer service all massively improved - if they can replicate that elsewhere it can only be a good thing.

[IndustryInsider]

TfL^» (Transport for London - about) are doing an excellent job out this way in the Thames Valley - stations/reliability/capacity/regularity/customer service all massively improved - if they can replicate that elsewhere it can only be a good thing.

Good to hear - the whole point of Crossrail, and the massive amount of money spent on it, was to transform every aspect of the route.  Just a shame you can’t pop to the loo on the train if you need to. 

[eXPassenger]

There are some interesting posts on the RailUK forums.
1 - This was referred to in the last set of Go-Ahead's accounts but with a probable cost of £8M, so it is not new
2 - The current contract expired on 17 October and the DfT^» (Department for Transport - about) had the option of renewing it.  They have not taken this option.

So if the political speak is stripped away there was a known problem under investigation that has turned out to be larger than expected and the DfT have not extended a contract past its due date.  As usual the media have concentrated on the political statement and have not investigated the full facts.