Cost to taxpayer of disrupted Southeastern franchise process to hit £6.5 million

The long delayed and disrupted process to award a new franchise to operate Southeastern rail services will likely cost the public purse £6.5 million by the time it’s awarded in 2019.

This week the Rail Minister confirmed another delay until 2019. Originally the franchise was intended to end in 2012 but has seen numerous short term extensions resulting in minimal investment.

The franchise process then kicked off in 2017 with an award date of 2018. Many now expect it in April 2019. It’s the latest in a long line of set backs.

So far £5.6 million has been spent on the process, which has only three bidders. All of which have various issues and over the summer they had to re-submit elements of bids.

The Department for Transport under Chris Grayling blocked devolution of inner suburban services from Southeastern to TfL and ripped up a previous agreement to do so. Despite making mistakes costing large sums with other franchises such as Virgin in 2012, the DfT have ploughed on making more.

When they announced plans for the franchise spec in 2017 they were wildly out on planned housebuilding numbers which I highlighted at the time. They quoted 36,000 yet the planned figure is at least 70,000 in south east London. Erith and Thamesmead Labour MP Teresa Pearce chased them and the Department responded to say it was simply a mistake.

Budget cuts

The DfT also saw the heaviest cuts in the 2015 spending review, so these sums have a sizable impact on a stretched department.

£6.5 million may not seem a huge amount in the grand scheme of things and would only buy around four carriages, but for those on packed trains four carriages would be a lifeline. Of course, it wouldn’t be used for four more alone but gives an example of how money for franchising is not being spent on improvements.

It could also be used to staff many stations from first to last train.

Opponents of franchising see the process as wasteful. Southeastern isn’t the only franchise bid ongoing at the moment – and combined with others see tens of millions going to consultants at the DfT.

In addition, there’s spending by franchise bidders such as Stagecoach. It’s estimated that each bidder spends around £10 million. That’s £30m alone on this process – and bidders look to make that up elsewhere.