New Zealand markets closed
  • NZX 50

    12,868.32
    +258.44 (+2.05%)
     
  • NZD/USD

    0.6776
    -0.0007 (-0.11%)
     
  • ALL ORDS

    7,707.20
    +102.00 (+1.34%)
     
  • OIL

    72.12
    +0.07 (+0.10%)
     
  • GOLD

    1,792.10
    +7.40 (+0.41%)
     

Government to take over Southeastern rail after £25m tax breach

·2-min read
Government to take over Southeastern rail after £25m tax breach
Transport secretary Grant Shapps: 'There is clear, compelling and serious evidence that LSER have breached the trust that is absolutely fundamental to the success of our railways.' Photo: PA

The UK government on Tuesday announced it would take over the running of Southeastern rail (LSER), owned by operator Go-Ahead, as a "serious breach" of the franchise agreement's "good faith" obligations was exposed.

An investigation conducted by the Department for Transport has identified evidence that since October 2014, Southeastern had not declared over £25m ($34.2) of historic taxpayer funding which should have been returned. This amount could end up being higher as further investigations are carried out.

The takeover will take effect mid-October, with the government reassuring consumers that fares, tickets and services would not change.

"It has always been this Group's intention to provide the best possible public transport, and to work in partnership with the Government and related agencies. We recognise that mistakes have been made and we sincerely apologise to the DfT. We are working constructively with the DfT towards a settlement of this matter," said the Go-Ahead Group's chairman, Clare Hollingsworth. 

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

"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," said transport secretary Grant Shapps.

"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 said in a statement.  

"Given the government’s commitment to protecting taxpayers’ interests, this decision makes clear we will hold private sector operators to the highest standards, and take swift, effective and meaningful action against those who fall short."

Read more: Oil prices head above $80 per barrel as fuel crisis beds in

"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," said Shapps.

"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."

Watch: What is inflation and why is it important?

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting