STRIP GOVIA OF RAIL CONTRACTS

4 RMT helpline 0800 376 3706 :: october 2021 :: RMTnews RMT has called on the government to strip Govia Thameslink Railway (GTR) of its Thameslink, Southern and Great Northern franchises after the union raised further questions about the senior management of the company. The government is taking the Govia franchise SouthEastern into public ownership this month after it was discovered that £25 million of taxpayer’s money had gone missing. SouthEastern, officially known as London and South Eastern Railway (LSER), will join London North Eastern Railway (LNER) and Northern and be taken over by the government’s in-house Operator of Last Resort (OLR). Southeastern is rumoured to have been reported to the Serious Fraud Office following the government’s action in taking over the franchise in response to what it calls ‘a serious breach of the franchise agreement’s “good faith” obligation in relation to financial matters’. RMT research, entitled ‘Fit and Proper People? Govia’s profits and the South Eastern franchise’ reveals that: • The senior management of Govia knew that the Department of Transport was concerned about their reporting of profits as early as March 2020, even as they negotiated a bailout with the government • The South Eastern franchise was seen by Govia as being vital to the Go-Ahead Group’s ability to pay dividends, with senior executive remuneration packages linked to maintaining the contract and its profitability • During the period in which LSER is accused of breaching good faith in reporting around its profit- share obligations, Govia received in excess of £360 million in net subsidy from the government and extracted £182 million in dividend payments, accounting for more than 60 per cent of all rail dividends paid to the Go- Ahead Group • Company CEO David Brown personally made more than £9 million in the same period, much of it in performance-based bonuses, some of which were linked to Southeastern’s profitability • Four out of Govia’s five Directors are also Directors of LSER - the same people who oversaw what was happening at Southeastern - are running the Thameslink, Southern and Great Northern franchise, the biggest in Britain. RMT general secretary Mick Lynch said that Govia’s executives, the same people who are now running trains out of London and across the Southeast, were up their necks in what was going on at South Eastern. “They were fixated on maximising Southeastern’s profitability and whatever it was exactly that they were up to, Govia’s shareholders and key executive personnel benefited financially, apparently from money that belonged to the taxpaying public. “This is yet another story of the failure of rail privatisation but it must also be the end of Govia’s time on the railways. “They should pay back the dividends and bonuses they took over the last seven years and the government need to add their franchise to its growing public sector in rail without further delay. “We are calling for a forensic investigation into what happened in this franchise and whether it’s happening elsewhere on the network, but we also need to ask questions of the government because it’s clear they knew there were issues on South Eastern even as they were negotiating a multi-million pound bailout deal which guaranteed Govia profits,” he said. The decision to remove Govia, a joint venture between Go-Ahead Group (65 per cent) and Keolis (35 per cent,) followed an investigation which identified over £25 million of taxpayer money was not declared by LSER, amounting to a significant breach of the franchise agreement. An investigation conducted by the Department for Transport identified evidence that since October 2014 LSER had not declared this historic taxpayer funding which should have been returned. Go-Ahead has postponed its financial results for the year which had been due last month until July next year. The government’s decision leaves the group with GTR, which runs the Thameslink, Southern, Great Northern and Gatwick Express services. It also runs trains in Germany and Norway and is the biggest operator of buses in London. Transport Secretary Grant Shapps said that there was compelling and serious evidence that LSER had breached trust but went on to say that the government was keen to rapidly progress the Williams-Shapps Plan for Rail promoting a private sector-led network. Mick Lynch said that this latest public sector rescue of a privately operated rail service should kill off the risky and expensive nonsense of rail privatisation once and for all. "It appears that this collapse is all about Govia playing fast and loose with their financial commitments and raises serious questions about the viability of their other operations including the busy Thameslink services. "RMT will ensure that SouthEastern staff are properly looked after and protected by the TUPE transfer. "It's time to put the rest of Britain's failing private rail operations out of their misery, cut out the middleman and build a public railway that's fit for a green, post-Covid future,” he said. STRIP GOVIA OF RAIL CONTRACTS RMT report shows Govia should be stripped of remaining rail franchises after government nationalises Southeastern