Wednesday 7 August 2019 6:28 pm

Rail firms could seek costs after government scraps franchise bidding

Two train firms could seek to recover costs from the government after it scrapped the bidding process for one of the UK’s largest rail franchises.

The Department for Transport (DfT) insists there is no recourse for the rail firms as they enter into the bidding process at their own risk.

Read more: Scrapped: Government cancels bidding for Southeastern rail franchise

City A.M. understands that Dutch firm Abellio, which was gunning for the Southeastern franchise, and rival Go Ahead, the parent of the Govia and Keolis joint venture, are however reviewing their options.

The costs the companies could seek to recover runs into the tens of millions of pounds.

The government said it had scrapped the bidding process for the Southeastern rail franchise because it was concerned the process would cost the taxpayer too much. It is unclear how the department will go about finding the next franchise operator.

Officials will now have until 1 April 2020 to choose the next franchise operator. Go-Ahead Group, which currently operates the railway, will run Southeastern for four months longer than planned to give Whitehall the chance to do this.

The DfT spokesperson said: “We have taken the decision to cancel the Southeastern franchise competition.

“This follows significant concerns that continuing the competition process would lead to additional costs incurred to the taxpayer, with no certainty that this would deliver envisaged benefits for passengers in a timely fashion.”

An Abellio spokesman said: “This is a really disappointing outcome for customers across the Southeastern network. Abellio had spent many months working with customer groups, councils and business organisations and we believe our investment plan for Southeastern would have delivered significant improvements with more seats, more services, better trains and upgraded stations.”

Read more: Government loses bid to throw out legal challenges against franchise snubs

Go-Ahead chief executive David Brown said he was “disappointed” the process had been cancelled.

“A lot of hard work was put into a strong bid that would have built upon the achievements of Southeastern in recent years in improving performance and customer satisfaction, delivering more capacity and investment.”