South Western Rail Franchise: Nationalisation
The question
To ask the Secretary of State for Transport, what estimate her Department has made of the cost to the public purse of bringing South Western Railway into public ownership.
Answered by Simon Lightwood
The costs associated with the transfer of a train operating company into public ownership cannot be determined until engagement with the train operator has commenced.
Each train operator will have their own circumstances that need to be addressed to enable a successful transfer. These are identified during the due diligence phase and then the costs for addressing them can be agreed.
As an example, previously, the Department has paid fees to South Western Railway of £8.2 million between September 2020 to March 2021. These can be found in the following link:
Overall, transferring service operations to the public sector will result in a saving of fixed and performance-based management fees currently paid to private sector train operators. This saving is estimated to be £110 million to £150 million per annum once all franchised contracts had expired, with a proportion of these savings achieved each year in the interim as individual services transfer. Please see the following link:
https://publications.parliament.uk/pa/bills/cbill/59-01/0133/en/240133en.pdf
Whilst all services will transfer as their existing contracts end, there are costs associated with the transfer from a private sector operator to a public sector company (mobilisation and due diligence costs) estimated at £1 million to £1.5 million per transaction. This is consistent with costs associated with transition following any competed franchise award as shown in the following link:
https://bills.parliament.uk/publications/56108/documents/5037.
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