Operator of Last Resort to Take Over Southeastern Following £25m Breach

The British government will take over running London & South Eastern Railway (LSER, trading as Southeastern) services due to LSER not declaring 25 million GBP of taxpayer money.

The Operator of Last Resort will start running services on 17 October and focus on punctuality and reliability.

A Siemens Desiro City Class 707 EMU for Southeastern
A Siemens Desiro City Class 707 EMU for Southeastern

The government called the actions by LSER a “significant breach of the franchise agreement”, in particular the franchise agreement’s ‘good faith’ obligation in relation to financial matters. These findings follow an investigation by the Department for Transport. LSER accumulated these 25 million GPB of taxpayer funding since October 2014 and these funds should have been returned.

So far, 25m GBP has been reclaimed. The owning group is investigating all related historic contract issues with LSER further. Once these are completed, the government will look into further options for enforcement action, including statutory financial penalties under the Railways Act 1993.

There are to be no changes to fares, tickets and services. The move will also not affect jobs.

Transport Secretary Grant Shapps said:

“There is clear, compelling and serious evidence that LSER have 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 unequivocally clear that we will not accept anything less from the private sector than a total commitment to their passengers and absolute transparency with taxpayer support.

““Under the new operator, we will prioritise the punctual, reliable services passengers deserve, rebuild trust in this network, and the delivery of the reforms set out in our Plan for Rail – to build a modern railway that meets the needs of a nation.”

The Operator of Last Resort comprises experienced railway managers who are already in charge of LNER and Northern.

The government said this move to OLR control was temporary and that it would move services back into the private sector in the future, but under a Passenger Services Contract – essentially a concessions-based model that puts revenue risk with the government rather than the operator.

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