Rail franchises operators & contracts

19.10.18

Urgent government talks after Dutch company plugs £80m funding hole in Greater Anglia

Greater Anglia has received an £80m rescue package led by the Netherlands, leading to reports of urgent talks between the UK and Dutch governments to fix the “flawed” funding formula in place.

Dutch company Abellio jointly owns Greater Anglia’s rail franchise and it has been revealed that they have had to pump £80m in subsidies into one of Britain’s biggest train networks over the past year.

Now the owners of the franchise are reportedly holding urgent talks with the both the British and Dutch transport ministers to try and change the funding formula that has forced this funding.

A spokesperson for Abellio said that the funding formula has fallen out of sync with commuting patterns, causing financial challenges for Greater Anglia.

The spokesperson said: “The agreement for the East Anglia franchise includes a risk sharing measure known as the Central London Employment (CLE) mechanism.

“This was intended to provide protection for the operator and the DfT against revenue fluctuations as a result of dramatic changes in the London economy.

“However, it is now widely accepted that CLE is a flawed mechanism that does not deliver on the intended aims.

“We are therefore working with the DfT to develop and implement more effective risk sharing models.”

The spokesperson also said that the financial discussions shouldn’t affect passengers and would have no effect on the roll-out of new trains in the near future.

The CLE formula has already been changed for rail franchises awarded since 2016 and Abellio says it hopes the government will alter it retrospectively for its own franchise.

The Greater Anglia franchise is jointly owned by Abellio and Japanese company Mitsui, with the franchise awarded two years ago and due to run until 2025.

Just last month, Greater Anglia unveiled new bi-mode trains as part of a new 58-strong fleet along with Stadler, who said they were “set to transform rail travel” in East Anglia.

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Image credit - Nick Ansell/PA Wire/PA Images

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