Southeastern to be renationalised after financial fraud allegations

The government is to take over the operation of rail firm Southeastern, after a serious breach of the franchise agreement’s “good faith” obligation in relation to financial matters was identified, transport secretary Grant Shapps has announced today.

The franchise will be managed by the government’s operator of last resort, who already oversee London North Eastern Railway and Northern, from 17 October.

A department for transport investigation has found evidence that since October 2014 the firm has not declared over £25 million of taxpayer funding which should have been returned.

A statement released by the department this morning said: “Further investigations are being conducted by the owning group into all related historic contract issues with LSER.

“Following these investigations, the government will consider further options for enforcement action, including statutory financial penalties under the Railways Act 1993.

“On the basis of the available evidence, we consider this to be a significant breach of the good faith obligation within the franchise agreement and will not be extending a further contract to LSER.

The government has said there will be no changes to fares, tickets or services.

Huw Merriman MP, chair of the Transport Select Committee, told the BBC Radio 4 Today program this morning: “I understand the Serious Fraud Office will be involved.
“It won’t make any difference to me as a passenger. The same lovely staff will still drive us where we need to go. The trains will look the same but senior management’s being removed.”

Southeastern operates services across London, Kent, East Sussex and the High Speed 1 lines.