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Business

Go-Ahead Group, parent company of former Southeastern franchise, set to pay £81.3m to Department for Transport over financial errors

By: Chris Britcher cbritcher@thekmgroup.co.uk

Published: 08:51, 24 February 2022

Updated: 09:11, 24 February 2022

The parent company of Southeastern - the rail company stripped of the franchise to operate trains across Kent last year - says it has cost it more than £80million.

Travel company giant the Go-Ahead Group was told it was to have the franchise removed last year after financial discrepancies over monies owed to the Department for Transport (DfT).

Southeastern had previously operated the majority of domestic services in Kent - including the high-speed link to London

Now it says an independent review has revealed £51.3m is owed to the government - £49.2m of which has already been paid.

It says it is also bracing itself for a £30m financial penalty from the DfT.

The group stopped operating the Southeastern franchise - formally the London & South Eastern Railway (LSER) - on October 17, 2021.

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Since then it has been operated, albeit under the existing Southeastern branding, by what is known as the Operator of Last Resort - the DfT subsidiary which has taken over failing franchises from the private sector.

Transport Minister Grant Shapps described it at the time as a "serious breach" of its franchise agreement.

The Go-Ahead Group was stripped of the Southeastern franchise in October

Go-Ahead says the DfT's decision to remove the franchise was "regarding the calculation of profit share payments and treatment of certain overpayments made by the DfT to LSER".

It says it "accepts that serious errors were made" in relation to the franchise "over several years" and has apologised to the DfT.

Go-Ahead bosses added it was "implementing enhanced corporate governance arrangement, particularly relating to the way in which complex rail operations are overseen".

The group also operates the Great Northern, Thameslink, Gatwick Express and Southern franchises.

New boss Christian Schreyer, who joined in November not long after the franchise was lost, said he was “optimistic” the issues over the franchise could be resolved soon.

Christian Schreyer, CEO of the Go-Ahead Group, has apologised for the errors made over the Southeastern franchise. Picture: Go-Ahead Group

He added: “It’s been a very challenging year for Go-Ahead and our shareholders, for which I apologise, on behalf of the board.”

In its annual financial report published today, it also warned "other commercial negotiations with the DfT are ongoing, with an estimated additional liability of £21.3m".

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