Thread by @garius

I'd kinda forgotten that everyone else wasn't aware SouthEastern was going OLR. It's not actually as big a surprise as it seems (or as the renationalistas will claim).

DfT incompetence combining with bad franchise management

We'll pull together a quick LR piece on the situation

Short version is that the franchisee fucked up a LOT early on (Which I'm sure everyone remembers) and then never really managed to dig themselves out of the various management and structural problems they created in that period.

This was made worse by the DfT sticking their heads in the sand about the whole thing while also fucking up a lot of the calculations on potential profitability that they were telling franchisees were the best way to work out Benefit/Cost (BCR) on proposals.

DfT tried to offload the Franchise (without any major financial support) to TfL at one point, rather than the lines they DID devolve and TfL were like:

"HAHAHAHA no fuck off. Only if you pay us what you'd have paid them to fix it, too."

Which DfT didn't want to do.

So Southeastern remained a line run by people who now wanted to run it better, but were starting from such a negative structural position that it was ALWAYS going to be a big ask.

One it soon became clear wasn't going to happen.

So then you get a Hail Mary contract extension that no one really wanted, but was the least-worst option at the time as the UK rail market isn't exactly an attractive one. Brexit means Brexit, Covid, DfT shenanigans etc.

But the writing was always on the wall from that point. And thus the expectation (and work behind the scenes) has, for some time, been on the principle that it would slide over onto a pre-primed Operator of Last Resort setup at contract expiry.

Of course the privatistas (including the DfT) will claim that all of this wasn't an issue with the franchise system. It's extraordinary circumstances etc. etc.

While the renationalistas will make out it's some kind of mega financial grift.

Neither is really true.

What you had is the service specifier and regulator (DfT) being mediocre. The service providers being mediocre. And passengers suffering as a result.

Both of which scenarios are, sadly, entirely possible in whatever flavour of rail management extremism you buy into.

As always, the only real lesson here is:

1) Run railways on the principle of wider economic/society benefit. If you try to package them as silos of short term profit they fail
2) Listen to your staff when they tell you shit isn't working
3) Pay experts to run and regulate them.

As to what happens next?

Well the UK rail market isn't exactly buoyant right now. And pretty much every player in the market has now seen through the DfT's attempts to try and persuade them there's real money to be made in running commuter services. There isn't.

Of course, if the government hadn't spent the last two years financially (and politically) shitting on TfL they'd have an easy out here:

Hand the whole thing over to TfL with a quiet (but insufficient) subsidy, and let them try and unpick (and part-fund) the whole unholy mess.

Best case they would, in which case the government would have just saved a bit of money and could claim they're happy, caring people who like local devolution and levelling up etc. etc.

Worst case TfL fuck it up and they get to have a cheap pop at the Mayor.

But, given the massive financial handicapping of TfL, and the constant attempts to make a cheap political point at London's expense on the subject of devolution/levelling up, that's not exactly an easy U-turn to make.

So my instinct is we'll see one of two things:

1) DfT will attempt to refranchise it out as a managed concession (i.e. Overgroundish). And then probably have to pay over the market rate to attract a bidder.
2) They'll just force it onto TfL as part of the next finance settlement

The second one on the list would be the worst possible timeline option for London, and require the least amount of accepting responsibility/long term thinking.

So as it's this government, let's just assume they'll likely do that one.

The eventual NAO report into all this, by the way, will be blockbuster reading.

That's the time you can expect a FULL write-up on LR. It'll be proper popcorn stuff (if 'how bad management fucks up companies' is your particular poison)

I expect there are various people at DfT right now playing with crayons to answer this question.

(I can see ways they'd do either)

https://twitter.com/bitoclass/status/1442799404495278080

FINAL NOTE: There'll be lots of people saying they know what happens next with Southeastern in the next few days. Ignore them.

Nobody does. There's no plan yet. That's fine. Kinda. S'why the OLR system exists.

Sometimes stuff has to break before you can do the 'what's next'

SUPER FINAL NOTE: The absolute possible worst take from all of this will be that HS2 will be a failure because HS1 is part of the Southeastern franchise that has failed.

So expect to see that one hitting Twitter from all your favourite Nimbys soon.

You have been warned.

Metro services would be the palatable bit. Other bits I could see them continuing to operate and then trying to repackage later.

But as I say, it's all just pure crayoning at the moment.

https://twitter.com/bitoclass/status/1442799404495278080

EXTRA SUPER FINAL NOTE:

Do remember that "EXCLUSIVE!" or "BREAKING!" in big paper headlines or on TV News really just means:

"Shit our journalists only just noticed, as we told them to focus on Harry and Megan."

This is very much the case with Southeastern. It's not a surprise

I'll be honest: Good question but I don't know.

Haven't really looked into it/thought about.

https://twitter.com/eleganesh/status/1442809678392668168

A version of this will certainly be one of the options on the table, I suspect. But will rely on a lot of cogs turning quicker than planned.

https://twitter.com/justcallmeol/status/1442810122296774676

I should also point out that when I was doing stuff for Rory Stewart's Mayoral campaign we actually had a super-sexy plan for this exact unfolding scenario, around metro service takeovers that wouldn't make the DfT shit the bed.

But I didn't come up with it, so not mine to share

DfT finally began to clean out the Southeastern litterbox last year, once it was clear OLR was likely.

At that point, they started finding lots of extra dried turds like this. That turned OLR next month from 'likely' to 'guaranteed'

https://twitter.com/caschmidt6/status/1442814338478268416

So what we're really seeing right now is just how much was in the litterbox. But only because the process of finally cleaning it out was already underway.

Weirdly, TfL's biggest lever over the government at the moment is just how much debt the government has put TfL in.

If TfL defaulted, it would DESTROY credit risk ratings for other UK local authorities/equivalents, screwing the Treasury/lending.

https://twitter.com/deworde/status/1442815639920549894

Once again, proving that this government's sole talent is scoring own goals immediately after scoring at the other end.

So if DfT did foist Southeastern Metro on TfL, I suspect they've missed the opportunity to do so without at least adequate financing.

But who knows with this government. Their PCR (Pettiness-to-Cost-Ratio) calculations are so far in excess of any we've seen before, that it's hard to judge when they'll do something ridiculously damaging rather than take the sensible option.