The Southeastern rail franchise, operated by Govia has been extended again, to April 2020 – but wont now be put up for formal tender to be renewed after that.
Govia took over the franchise in 2006, and it was due to expire in March 2014. Following the DfT’s review after the cancellation of the InterCity West Coast franchise process, extensions were granted to the franchises due for renewal with Southeastern’s franchise extended until June 2018, then December 2018, June 2019, November 2019, and now until 1st April 2020.
The Department for Transport (DfT) has also confirmed that the competition for the next South Eastern franchise has been terminated, citing “concerns that continuing the competition process would lead to additional costs incurred to the taxpayer, with no certainty that this would deliver envisaged benefits for passengers in a timely fashion.”
Not mentioned was the real problem, that the government is facing court action over how it was trying to award the franchises with a requirement that the operators take on open-ended pension liabilities from the previous operators.
The £25 billion Railways Pension Scheme has a deficit of around £7.5 billion, which needs to be plugged, by a mix of 60% company and 40% employee contributions.
Virgin, Stagecoach and Arriva Trains are all suing the government after it blocked them from bidding for the Southeastern franchise, and others, following their refusal to accept the still uncertain scale of the pension liabilities.
The franchise bidders don’t want “open ended” liabilities, and the RMT has threatened to strike if its members are asked to pay more into the scheme.
As a result of the pensions dispute and the franchise cancellation, from next April the government will take direct control of the Southeastern services until it decides what to do with it.
That could give TfL time to plan it’s own bid to take over the franchise, if it can find the money somewhere, or for the government to reissue the franchise following the imminent rail review by Keith Williams which could see a major shake-up of how the railways are run.