The Go-Ahead Group announced that the Department for Transport (DfT) has awarded a National Rail Contract (NRC) to Govia Thameslink Railway (GTR) to continue operating the Thameslink, Southern and Great Northern rail services, the UK’s largest railway network.
This follows the loss of the Southeastern rail operation in October after an investigation into £25m of unaccounted-for taxpayer funding for which the operator has been fined £23.5m by the DfT.
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| Christian Schreyer (left), CEO of The Go-Ahead Group, and Patrick Verwer, CEO of Govia Thameslink Railway |
Contract highlights
The new contract commences on 1 April 2022 and will run until at least 1 April 2025, with up to a further three years at the Secretary of State’s discretion.
The NRC, like the Emergency Recovery Measures Agreement (ERMA) contract it will replace, is a management contract which has extremely limited exposure to changes in passenger demand and no substantial cost risk to GTR.
GTR will earn a fixed management fee of £8.8m per annum (equivalent to a margin of 0.5% of GTR’s cost base) to deliver the contract, with an additional performance fee of up to £22.9m per annum (equivalent to an additional 1.35% margin).
Subject to the achievement of performance targets set by the DfT, the maximum fee receivable by GTR would therefore be £31.7m per annum (equivalent to a margin of around 1.85%). All figures are on a pre-IFRS 16 basis.
The contract also allows for individual project fees to be earned by GTR on the delivery of additional initiatives as directed by the DfT.
The contract also allows for individual project fees to be earned by GTR on the delivery of additional initiatives as directed by the DfT.
Background
Since 2014, Govia Thameslink Railway has operated Southern, Thameslink, Great Northern and Gatwick Express, which delivered 349 million passenger journeys annually prior to the COVID-19 pandemic. GTR manages 235 stations in London and the south-east of England and employs 7,400 people.
The NRC serves as a bridge to the future Passenger Services Contracts intended to be let and managed by Great British Railways in line with the Williams-Shapps Plan for Rail, announced in May 2021.
During the NRC period, GTR will focus on encouraging more people to return to rail following the pandemic. It will continue to further improve the customer experience, with dedicated funds available for localised station enhancements, for customer and community led projects, and for projects to remove barriers for disabled people at more of its stations. GTR will continue to improve punctuality and reliability through close collaboration with Network Rail.
Building on its already strong environmental credentials, GTR is aiming to become an even greener train operator, working towards phasing out its diesel fleet by 2035, introducing its first zero emission ancillary vehicles in the next 12 months, and aiming to increase recycling rates to 80 per cent over the next three years.
Expanding on its successful apprenticeship programme, GTR will increase apprenticeship opportunities – aiming for 2.5 per cent of its workforce to be new apprenticeship starts. Acknowledging the value of diversity, GTR will set targets aimed to build on its positive work to increase female and ethnic minority representation amongst both train driver recruits and in engineering/technical apprenticeships.
Go-Ahead’s subsidiary, Govia (Go-Ahead 65%, Keolis 35%), has operated GTR since it was created in 2014. With its industry partners it worked to deliver the Thameslink Programme which has transformed journeys to, through and within London.
More than 1,500 new railway carriages (replacing some of the country’s oldest fleets), over 1,000 station improvement projects and industry leading smartcards and tools, have all been delivered for customers.
Performance has improved with a steady increase in customer satisfaction over a five year period.
Last year Southern was named Passenger Operator of the Year at the National Rail Awards, with Great Northern as runner up. GTR’s support for the growth and wellbeing of the communities it serves has included a successful partnership with the Prince’s Trust that has enabled rail careers for 120 young people from challenging backgrounds, suicide prevention training for colleagues that has led to a 57% increase in life saving interventions, and the biggest roll out of life saving defibrillators on the UK rail network, with one available at every station.
