Posted 25th March 2022 | 3 Comments

Govia Thameslink wins new-style National Rail Contract

A new National Rail Contract has been awarded to Govia to run the Govia Thameslink Railway network for another three years.

The new contract is a stepping stone between the former franchise model and the forthcoming Passenger Services Contracts which will be awarded by Great British Railways in future.

Like the future Passenger Services Contracts, the arrangement is a management contract. GTR will earn a fixed management fee of £8.8 million a year, with an additional performance fee of up to £22.9 million annually. If performance targets are reached, the maximum fee would be £31.7 million a year, which the DfT said would be equivalent to a profit margin of around 1.85 per cent of turnover.

The contract also allows individual project fees to be earned by GTR. The DfT said the deal 'has extremely limited exposure to changes in passenger demand and no substantial cost risk to GTR'.

GTR's first contract, which began in 2014 and was officially considered to be a franchise, also incorporated fixed management fees, but then the costs risk was largely taken by Govia. This special form of franchise was awarded because the franchise-holder was responsible for managing major changes, including the introduction of the large Siemens Class 700 fleet. Since March 2020 GTR has been continuing under pandemic-related Emergency Measure Agreements.

The new contract starts on 1 April and will run until at least 1 April 2025, with up to a further three years at the discretion of the transport secretary.

Govia is a joint venture between the British Go-Ahead Group and French Keolis, and Go-Ahead is the majority shareholder, with 65 per cent. Go-Ahead CEO Christian Schreyer (pictured, left) said: 'I’m delighted with today’s announcement. Under this new contract we will build on our achievements in enhancing performance in recent years. We will be working closely and collaboratively with DfT, NR and other partners to run the most reliable service possible, and we will be putting passengers’ interests first.'

Govia Thameslink CEO Patrick Verwer (above, right), added: 'We welcome this positive news, which marks the start of a new era for GTR. I’m incredibly proud of how far we have come, including overcoming two challenging years dominated by Covid. All of this is thanks to the continued focus and passion that GTR colleagues bring to work every day.'​



Reader Comments:

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  • david c smith, Bletchley

    Oh dear! This "management contract" idea seems to have the same "Achilies Heel"as the franchise model . The railway will, in effect , be quasi- nationalised
    with private sector operators employed by the State to do a few peripheral ,no-risk things on their behalf. All the worthwhile things that privatisation could ( and started to do initially ) have done given a freeer hand , and the access to investment capital to fund these, on the basis of taking risk were stopped by bodies such as the Strategic Rail Authority, and similar.

    Of course, the above is most relevant to intercity and long distancce operations , which typically don't have a captive market monopoly , and where the pasenger interest can be looked after through inter TOC competition.and risk taking. The London commuter belt is where so much of
    government thinking is focussed though, where operators do often have monopoly power. But here perhaps, the answer could have been to give the power to directly elected bodies on a suitable local scale ( typically as the present TfL, or Southeastern ) who could then appoint franchisees or commissioners, as they each see fit .

    DfT , or a Quango could have the role of designing the financial framework of incentivising subsidies and charges in which the TOCs , FOCs and ROSCOs operate.

  • Neil Palmer, Waterloo

    Er, that'll punish Go-Ahead & Keolis for trying to pull of a multi-million pound scam with Southeastern ? :-(

  • Andrew Gwilt, Benfleet Essex

    Perhaps Govia Thameslink Railway could order more new trains especially for Southern to replace the Class 455 units used on the suburban services in South London. And the Class 313 units used on the East Coastway Line, West Coastway Line and on the Seaford, Bognor Regis and Littlehampton branch lines.
    [Govia Thameslink Railway will not be ordering any rolling stock. Like the other former franchises it is now operating under a management contract, and will continue to do so under Great British Railways.--Ed.]