Public spending watchdog the National Audit Office has said the Department for Transport has failed to get value for money from the country’s largest rail franchise because of its unreliable train services.
It said that despite having a rate for cancelled and late-running trains that is more than double the national average, DfT could still end up having to pay Govia Thameslink tens of millions of pounds a year because of contract changes the department wanted to make.
The NAO called on the department to give more thought to the impact on passengers when agreeing future franchise agreements – particularly in relation to performance levers and the likely effect on service users “should risks crystalise”.
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The department created the franchise operated by Govia Thameslink in the knowledge that upgrade work on part of the network would be a source of disruption, but the NAO said DfT needed to do more work in future to ensure that other sources of disruption were minimised in such circumstances. Staff shortages and strike action were responsible for 60% of the cancelled or severely delayed trains that gave Govia Thameslink its unenviable service reputation.
Govia Thameslink runs Thameslink, Southern, Great Northern and Gatwick Express trains, connecting the capital with towns and cities across the east and south-east of England. The franchise – sometimes referred to as TSGN – is the largest of 15 overseen by DfT.
But since July 2015, when Govia Thameslink assumed responsibility for its current complement of services, around 146,000 trains have either been cancelled or delayed by over 30 minutes – a rate of 7.7% compared to 2.8% on the rest of the network.
The NAO said the level of disruption caused to passengers meant that to date the franchise had failed to deliver value for money.
Although the watchdog conceded that driver and crew shortages, and industrial action over driver-only train operation, had made a significant contribution to Govia Thameslink’s punctuality issues, the NAO said that the DfT neither fully evaluated the possibility of industrial action related to the “driver-only” plan nor sought sufficient assurances on staffing levels before awarding the franchise.
“Govia Thameslink received fewer drivers than it expected from the previous operator of the Thameslink and Great Northern routes, and driver shortages have persisted on Great Northern services,” the report said.
“Even if Govia Thameslink had received the number it expected, there would still have been some shortfall.”
The report also noted that DfT had contracted Govia Thameslink to deliver a specific level of increased services despite concerns from Network Rail and the franchisee that the network could not support the proposed timetables reliably.
“The department expected its normal processes for agreeing train services to address these concerns,” the NAO said.
It added: “The department and Network Rail did not have a good understanding of the underlying condition of the existing network at the point when the department set the requirements of the franchise.
“In 2016, Network Rail estimated that an investment of up to around £900m (cash prices) of maintenance and renewal work was needed to achieve the resilience needed to run the new services on the Thameslink network reliably, in addition to infrastructure investments already planned.”
The NAO said that while DfT had chosen to enforce the terms of its contract with Govia Thameslink, rather than terminating it, and had agreed a settlement that would see the operator fund a £13.4m spending programme for missing its targets, the department’s troubles were not at an end.
“It is unclear how the department will incentivise Govia Thameslink to deliver good services for passengers in the future, having removed its ability to use financial performance penalties up to September 2018,” the NAO said.
“The department also expects to pay Govia Thameslink for the additional costs, potentially amounting to tens of millions of pounds a year, resulting from changes to the department's requirements.
“The contract changes are needed because the department has agreed to alter the train services required in the franchise contract, which it had anticipated at the start of the contract, and to reflect delays to the delivery of new trains for Thameslink services.”
NAO head Amyas Morse said DfT had to bear some responsibility for the disruption that passengers had experienced on Govia Thameslink operated services.
“Over the last three years long-suffering passengers on the Thameslink franchise have experienced the worst performance on the rail network,” he said.
“Some of the problems could have been avoided if the department had taken more care to consider passengers in its design of the franchise.”
The DfT insisted that strike action on the part of RMT members was the principal cause of passenger disruption on Govia Thameslink services and called on the union to call off its “needless” protests.
“The NAO report confirms that the primary cause of delays and cancellations to passengers has been lack of available staff, which is a direct result of strike action,” a spokesperson said.
“The TSGN franchise was brought together to deliver the Thameslink Programme which will transform North-South journeys through London this year. New trains will run every two-to-three minutes through central London, a new rail hub will connect to Crossrail at Farringdon, and a new station opened last week at London Bridge.
“Clearly the disruption passengers have experienced is unacceptable but the NAO recognises that service has improved over the last 12 months. The government has taken a number of steps to ensure this improvement including the provision of an additional £300m to improve reliability on the Brighton mainline.
“We expect service improvements to continue as the Thameslink programme is completed.”
According to the NAO, DfT is due to make a net return of £760m on the TSGN franchise over the three-year period between September 2014 and August 2017, factoring in £3.6bn in fare revenue minus franchise payments of £2.8bn made to Govia Thameslink.
The firm won the franchise in May 2014 and began operating Thameslink and Great Northern services in September of that year, taking on Southern and Gatwick Express services in July 2015.