Rail franchise contractual levers failing to achieve even average performance levels

The UK Government’s spending watchdog, the National Audit Office (NAO), has concluded that high levels of disruption faced by passengers mean that, to date, the Thameslink, Southern and Great Northern rail franchise has not delivered value for money.

The franchise is the largest of the 15 rail franchises managed by the Department of Transport (DfT) and brings together four rail services, Thameslink, Southern, Great Northern and Gatwick Express, connecting London with towns and cities across the south east and east of England.

In a review of the franchise, which includes the Thameslink, Southern and Great Northern lines, the National Audit Office (NAO) found that although performance improved after a remedial plan was introduced, it still fell below the network’s average.

The performance levers included financial penalties and the imposition of the remedial plan, which involved commitments to recruit and train new drivers. The Department for Transport (DFT) also considered cancelling the contract in late 2016.

Since taking over the franchise in 2015, around 146,000 services, 7.7% of planned services, had been cancelled or delayed by more than 30mins. This is compared to a network average of 2.8%.

“Over the last three years long-suffering passengers on the Thameslink franchise have experienced the worst performance on the rail network. Some of the problems could have been avoided if the Department had taken more care to consider passengers in its design of the franchise.”

Amyas Morse, head of the National Audit Office, 10 January 2018

The DfT and Govia Thameslink consider that long running industrial action was the most important cause of train crew shortages. It would have been difficult to foresee industrial action on this scale.

Other important causes of delays and cancellations (37%) include the reliability of some train fleets, Network Rail’s management of the rail network, and failures of track and other infrastructure assets such as signalling.  Since March 2017, the percentage of trains arriving within five minutes of their scheduled time has exceeded 80%, however this is still below the national average.

The NAO report also said it was unclear how the DfT would incentivise performance for the first nine months of 2018 because it had already agreed to let Govia Thameslink “buy out” its performance liabilities up to September 2018, thereby removing the DoT’s ability to issue financial performance penalties.  The DfT told the NAO it agreed the buy-outs, £5m a year for 2016-17 and 2017-18, in order to attract more investment into the franchise and to improve performance.

Negotiations on a second remedial plan and interim performance measures are ongoing, the NAO notes.  Nevertheless, the DfT still anticipates The Department paying Govia Thameslink an unknown amount, potentially amounting to tens of millions of pounds a year, resulting from changes to the Department’s franchising requirements anticipated at the start of the contract in 2015, and also to reflect delays to the delivery of new trains for Thameslink services.

Source: https://www.nao.org.uk/press-release/the-thameslink-southern-and-great-northern-rail-franchise/