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Ministers have lowered performance standards for the UK’s largest rail franchise after its operator Govia Thameslink Railway failed on most measures of service quality in the first year of its contract.
The softening of the targets for the company that runs three of the busiest commuter rail routes into London could trigger millions of pounds in bonus payments to the company, a joint venture between privately owned Go-Ahead and Keolis, a subsidiary of French state-owned rail operator SNCF.
The lower targets for the 12 months to the end of March 2024 are published in filings on GTR’s website, which also showed that the company regularly missed at least two-thirds of the nine service-quality measures in the first year of its contract, which began on April 1 2022.
GTR confirmed the government had loosened seven of the targets but said performance benchmarks were just one metric that the government took into account in triggering any bonus payments. Some of the performance standards that were lowered included metrics for train cleanliness, ticketing and staffing, and customer service.
“Our absolute focus is on providing improved services for our customers, as demonstrated by nine out of 10 trains arriving within five minutes of their scheduled time in the year to March 2023,” the company said.
Louise Haigh, Labour’s shadow transport secretary, said the decision by ministers to soften the targets and the potential for bigger performance payouts left the government with “serious questions to answer over mismanagement of taxpayers’ money”.
“Rather than demand better on behalf of passengers, ministers have sat back and watched failing operators be rewarded with taxpayer-funded bonuses,” she added. “It is passengers and the hard-pressed taxpayer who are paying the price for this broken system.”
Under the terms of its six-year contract awarded in 2022, GTR is paid a fixed management fee of £8.8mn per year, with the chance to earn an additional performance fee of up to £22.9mn per year. This maximum fee of £31.7mn per year is equivalent to a margin of around 1.85 per cent of its cost base.
The government stepped in to save the rail industry from collapse when the coronavirus pandemic struck and assumed all financial risk by shifting train companies on to tightly controlled contracts that paid a fixed management fee.
Under the regime, which gives operators a steady and effectively risk-free return, ministers can vary the service quality schedules and benchmarks. One government official said it was not unreasonable for ministers to tweak the targets given GTR’s contract was still in its early phase having been awarded in 2022.
The government declined to say if it had varied the terms of any other rail contract. But in a statement it said GTR’s performance had improved over the past year. “Performance should be assessed through targets that are achievable and incentivise operators to deliver concrete improvements that benefit passengers,” it added.
Labour has vowed to nationalise the railway system if it wins this year’s general election by bringing operators into public ownership as contracts expire.
It has indicated there would be no role for private companies running trains under the new system. But industry executives have pushed back and urged Labour to reconsider, pointing to a significant rise in passengers between the privatisation of the industry by the then Conservative government in the early 1990s and the coronavirus pandemic.