Southeastern subsidy soars to £415m

The cost to taxpayers of bankrolling one of Britain’s biggest rail companies is more than four times what it was when the operator was in private hands prior to the Covid-19 pandemic.
Southeastern, which connects Kent, East Sussex and London, received £415 million in state aid in the year to March, up from £402 million in the previous year, according to recent corporate filings. This was despite passenger numbers rising by nearly 10 per cent and the number of train services increasing by 4.7 per cent. Southeastern said that it had been hit by spiralling costs.
The operator was brought into full state ownership in October 2021, after Govia, a joint venture between Go-Ahead and France’s Keolis, had not declared more than £25 million in taxpayer funding dating back to 2014.
Even while in private hands, the operator received a subsidy from the Treasury to operate services. This was only £102 million in the year to March 2019, the last comparative period before Covid hit, meaning the latest annual subsidy is more than four times the level of government funding now operations are in public hands.
Passenger numbers at Southeastern, which operates more than 2,000 trains, are still below pre-pandemic levels, however. It had 128 million passenger journeys in the year to March, down from 179 million in the year to March 2019, according to the Office of Rail and Road.
Average rail fares rose by 5.9 per cent in England and Wales in 2023 and by 4.9 per cent this year. A spokesman for the operator said that many other train operators were also still dependent on government handouts to balance the books.
Southeastern operates some of its services on the High Speed 1 (HS1) line from London to the southeast that it shares with Eurostar. HS1 is a 30-year concession lasting until the end of 2040 to operate, maintain and renew the 68-mile high-speed rail line. It is owned by a collection of pension and infrastructure investors.
Southeastern said that increases in HS1 “access charges” were in part to blame for the need for a greater amount of taxpayer subsidy. The operator also elected to scrap first-class fares during the financial year in question, freeing up 4 million extra standard-class seats a year.
Paul Barlow, finance director of Southeastern, said that the operator was “fiercely committed” to reducing the burden on taxpayers.
“Like many businesses, we have faced rising costs driven by unprecedented high inflation of over 10 per cent. These costs are contractual and an integral part of running a safe and reliable railway, including track access charges, train leases and, in particular, an increase in electricity costs.
“Southeastern is also one of the few operators to face a significant increase in the additional costs from operating high-speed services on HS1. We are leading discussions with industry partners to reduce the impact on the taxpayer.”