The government is taking over the running of the railway operator Southeastern, owned by Go-Ahead, from mid-October after discovering a “serious” breach of the franchise agreement.
The transport secretary, Grant Shapps, said an investigation by the Department for Transport found that since October 2014 Southeastern had not declared more than £25m of historic taxpayer funding that should have been returned, and described this as a serious breach of the franchise agreement’s “good faith” obligation.
He said the money had been recovered and further investigations were being conducted into all historic contract issues related to the franchise. After these investigations, the government will consider further options for enforcement action.
Southeastern’s owner, Go-Ahead, said it “acknowledges that errors have been made in relation to the franchise” and that the £25m had been repaid.
Shapps said: “There is clear, compelling and serious evidence that for years, London and South Eastern Railway Services have breached the trust that is absolutely fundamental to the success of our railways. When trust is broken, we will act decisively.”
The franchise will be run by the government’s in-house operator of last resort – railway managers who already oversee London North Eastern Railway and Northern.
Shapps the decision would not affect jobs and that fares, tickets and services will remain unchanged for passengers.
The Go-Ahead Group chairman, Clare Hollingsworth, said: “It has always been this group’s intention to provide the best possible public transport, and to work in partnership with the government and related agencies. We recognise that mistakes have been made and we sincerely apologise to the DfT. We are working constructively with the DfT towards a settlement of this matter.”
Southeastern is run by Govia and operates services across south-east England, covering London, Kent, East Sussex and the High Speed 1 lines.