Operator of last resort

An operator of last resort is a business in the United Kingdom that operates a railway franchise, on behalf of the government, when a train operating company (TOC) is no longer able to do so, and are nationalised on an interim basis. Since the last appointment in June 2023, there are now six such operators of seven rail services in England, Wales and Scotland. In December 2024, following new legislation in November, it was announced that the first of the remaining contracted TOCs would be taken back into public ownership in May 2025.

Purpose

Under the Railways Act 1993, which privatised passenger operations in the United Kingdom, the government is required to maintain continuity of passenger rail services if a franchise is terminated. In some instances, the government has been able to negotiate for the existing franchisee to continue to operate the franchise on a management contract until it can be relet, as happened when GNER defaulted on the InterCity East Coast franchise in 2007.[1]

Should this not be possible, the Department for Transport (DfT) in England (through DfT Operator), or the Scottish Government (through Scottish Rail Holdings) for the ScotRail franchise in Scotland, and the Welsh Government for the Wales & Borders franchise in Wales, is required to step in as the operator of last resort.

Structure

In July 2009, the DfT established Directly Operated Railways (DOR) as its operator of last resort for England.[2] In November 2015, the DfT wound up DOR and appointed a partnership of Arup Group, Ernst & Young and SNC-Lavalin Rail & Transit.[3]

Utilisation

Since privatisation in the mid-1990s there have been nine occasions when an operator of last resort has been appointed. As of December 2024^[update], the government has announced plans to hand over three more services to the operator of resort in 2025,[4] with an expectation that the hand over of all train operating companies' services, excluding open access operators, will be completed by October 2027.[5]

Current

• London North Eastern Railway has operated the InterCity East Coast franchise since 2018, after Virgin Trains East Coast defaulted.[6]
• Northern Trains has operated the Northern franchise since 1 March 2020, after the Arriva Rail North franchise was terminated by the Department for Transport.[7]
• Transport for Wales Rail has been the Welsh Government's operator of last resort since 7 February 2021, after the Wales & Borders franchise operated by KeolisAmey Wales became unviable as a result of the COVID-19 pandemic.[8]
• SE Trains has operated the South Eastern franchise since 17 October 2021, after the previous Govia-owned operator Southeastern (legally London & South Eastern Railway) was stripped of the franchise for not declaring £25 million of revenue.[9] The new operator has continued to use the Southeastern brand.
• ScotRail, controlled by Scottish Rail Holdings for Transport Scotland, has run the ScotRail franchise since 1 April 2022, after Transport Scotland announced that Abellio ScotRail's seven-year contract was to be terminated early because of poor performance.[10]
• TransPennine Trains Ltd took over from First TransPennine Express Limited on 28 May 2023 after the DfT terminated the contract on the grounds of poor service.[11][12]
• Scottish Rail Holdings took over Caledonian Sleeper from incumbent operator Serco on 25 June 2023.[13]

Future

• South Western franchise area – in December 2024, as part of the Starmer ministry's plans to re-nationalise passenger railways in Great Britain, the government announced that when South Western Railway's contract expires in May 2025, the service would be taken back into public ownership under the operator of last resort.[14] The South Western area will be the first under legislation approved in November 2024.[14][4]
• c2c service will be taken back into public ownership in July 2025[4]
• Greater Anglia service will be taken back into public ownership at some point in 2025[4]

Past

• South Eastern Trains operated the South Eastern franchise from 2003 until 2006, after the Connex South Eastern franchise was terminated by the Strategic Rail Authority.[15]
• East Coast operated the InterCity East Coast franchise from 2009 until 2015, after National Express East Coast defaulted.[16]

References

1. "East Coast to be re-franchised". Railway Gazette International. January 2007. p. 6.
2. "About DOR". Directly Operated Railways. 2009. Archived from the original on 27 October 2010.
3. Leftly, Mark (18 January 2016). "Government accused of 'contracting out' emergency train franchises to private firms". The Independent. Archived from the original on 24 May 2022.
4. "Government reveals first three operators to be renationalised after law change". Railnews. 4 December 2024. Retrieved 5 December 2024.
5. "Government to take over from train operators at 'average rate of one every three months'". www.railmagazine.com. 5 December 2024. Retrieved 5 December 2024.
6. "East Coast train line to be put into public control". BBC News. 16 May 2018.
7. "Troubled rail firm Northern brought under government control". BBC News. 29 January 2020.
8. "Welsh Government takes control of franchise". The Railway Magazine. No. 1436. November 2020. p. 6.
9. "Southeastern: Government takes over services after serious breach". BBC News. 28 September 2021.
10. "ScotRail goes back into public ownership". BBC News. 1 April 2022. Retrieved 1 April 2022.
11. "Transpennine Express to be brought into operator of last resort". GOV.UK. Retrieved 11 May 2023.
12. "TransPennine Express loses contract over poor service". BBC News. 11 May 2023. Retrieved 11 May 2023.
13. "Serco bids a fond farewell to the Caledonian Sleeper". RailBusinessDaily. 23 June 2023. Retrieved 25 June 2023.
14. Espiner, Tom (3 December 2024). "South Western Railway to be renationalised by Labour". BBC News. Retrieved 3 December 2024.
15. "Connex sacked from South-east franchise". The Railway Magazine. No. 1229. September 2003. p. 10.
16. "East Coast rail change confirmed". BBC News. 5 November 2009.