THE Department for Transport says it is not planning to 'strip Govia Thameslink Railway of its franchise', contrary to reports over the past couple of days.

The Department has been the subject of claims that it is preparing various options, which could include separating Southern from the rest of GTR, and even placing the whole franchise, which would also involve Thameslink, Great Northern and Gatwick Express, under the management of its own 'operator of last resort', Directly Operated Railways.

A DfT spokesman told Railnews that although there were no plans to 'renationalise' GTR, its performance was 'under constant review', along with all the other franchises managed by the Department.

The chair of the Transport Select Committee Louise Ellman has been critical of the DfT this week over the matter of whether GTR's poor performance on some routes, particularly Southern, amounts to a breach of its contract.

The discussions have been going on for ten months, and centre around whether GTR can claim 'force majeure' in its defence, meaning that it has been a victim of circumstances beyond its control.

The Department has a number of sanctions available to it if breaches of a franchise contract are established, ranging from a warning or a financial penalty to the cancellation of the contract. This has rarely happened since privatisation, although both the Connex franchises were terminated by the Strategic Rail Authority in the early years of this century partly because of performance problems.

As far as GTR is concerned, the DfT spokesman said 'the analysis is very complex' and is continuing.
 

Analysis
Sim Harris, Editor Railnews

AT first sight, excited claims that the DfT is making contingency plans for a change of management at Southern fall into the category of a ‘Sun to rise in the east tomorrow’ headline.

Of course the DfT is planning ahead – surely? The civil service is very good at contingency planning, although it – and the government at the time – was plainly caught out over Brexit. But in that case the smart money was on a vote for ‘Remain’.

The case of Southern is rather different. The problems have been all too apparent for nearly a year. The idea that officials in the Horseferry Road are blithely whistling a happy tune and adopting a ‘business as usual’ posture is surely beyond belief.

The DfT is playing its cards very close to its chest, so we cannot know which of several options might be the favourites behind closed doors. The least intrusive is to introduce some DfT managers to the GTR board, although it does not seem likely that they would take executive positions within the management structure. The most radical would be a cancellation of the whole GTR franchise, which would also include Thameslink, Great Northern and Gatwick Express (which was originally separate, but became part of the also formerly separate Southern franchise in 2008).

A complete takeover would presumably mean the resurrection of Directly Operated Railways, the Department’s standby company which exists to fulfill the role as ‘operator of last resort', but the DfT has officially ruled that out -- for now.

A takeover of Southern alone would mean rewriting a large and particularly complex franchise contract (all franchise contracts are complex, because lawyers don't like to leave anything out, but the GTR version must be something quite special). Worse, such a redrafting would have to be done at express speed, which is something lawyers really don’t like – and if they are forced, they tend to charge the earth.

There is also the small point that contracts cannot just be changed, cancelled or dropped into a skip on a whim. The DfT would have to be able to prove that GTR had been in breach of contract, specifically in the matter of performance targets. Otherwise, if it cancelled the franchise it would be open to claims for vast damages.

The final point is a simple one. What would ‘taking Southern back’ (however it is done) really solve? The unions have not declared a dispute over the ownership of the franchise, although their position remains that public ownership is much better. The parties are in complete disagreement over whether DOO does involve greater risks. The unions don’t want any more DOO, and they particularly don’t want a list of ‘exceptional circumstances’ which would allow Southern trains to stay in service without a second staff member on board.

That is the issue, and who is actually in charge seems somewhat beside the point. Until one side eases back from its current position, this unfortunate and damaging dispute seems set to run and run. And, yes, we do expect the sun to rise in the east tomorrow.

(For more from Sim Harris, see Hot Topic in the next print edition of Railnews, published 9 February.)