Southeastern boss: Success is not about public or private ownership
It’s safe to say Steve White has his fair share of experience in the UK’s railway industry.
The Derby-born boss of Southeastern, the rail operator connecting Kent, East Sussex and London, has been all over the shop in a 40-year career spanning Eurostar, Siemens and Transport for London (TfL).
Then-deputy chief executive of Southeastern’s former owner, Govia Thameslink Railway (GTR), White joined the operator in 2021 at a highly turbulent time.
Southeastern had just been brought under government ownership after an investigation uncovered “serious breaches” of its franchise agreement. Some £25m in taxpayer funding that should have been returned had been left undeclared, leading former transport secretary Grant Shapps to say the company had “breached the trust that is fundamental to the success of our railways.”
Southeastern promptly self-referred itself to the Serious Fraud Office (SFO) and has henceforth acted as a publicly owned body.
Now, the picture is different. According to a recent survey, Southeastern ranked fifth among all UK train operators for reliability, a far cry from the second bottom it scored back in 2016, and passenger satisfaction is also on the up.
You’d think, given the shift, White would be all-aboard the nationalisation train, but it’s a bit more nuanced than that. “In my mind, this isn’t a public or private debate,” he tells City AM in an interview.
Political talking points have often centred around whether to nationalise, or not to nationalise. Yet the view that such a debate does not capture the complexity of how to fix Britain’s beleaguered railways also garners some sympathy. While Japan runs one of the most successful, fully privatised, rail network’s in the world, Switzerland has drawn similar praise under a public model.
Still, White shares the near-unanimous opinion that some form of long-term reform is a must following an extended period characterised by industrial action, broken finances and delays and cancellations.
Labour’s nationalisation proposals are a “very positive step forward… a piece of the jigsaw,” White says. But the key change comes with the introduction of Great British Railways (GBR), the ‘guiding mind’ body first-envisaged during Boris Johnson’s premiership.
Labour’s ‘Shadow GBR’ keeps Johnson’s name but will function differently given the former Conservative premier’s plans were built for a largely privatised system. The new government sees GBR more as a tool to bring management of the network’s infrastructure, under Network Rail, together with train operation.
White is in favour of the plans either way. “The most effective way to operate a railway to recover from the pandemic is to bring track and train together,” he says.
“The last government had intended to do that, this government intends to do it. They might have done it slightly differently but primarily, that is fundamentally what changes the delivery of a railway.”
What of Southeastern though? The operator is an interesting case study, given it has already been nationalised for the best part of four years.
It faced backlash in October after it emerged taxpayer backing had soared to three times the level of 2019, when it was privately owned, despite fares and passenger numbers also increasing.
Yet White argues his team have been whittling that down from Covid-induced highs, by some £200m since he joined in October 2021. That has included cost cutting decisions such as axing First Class on the mainline, a move which freed up 4m seats, around 15 per cent of its total.
The railway veteran also blames a “very high inflation environment” for the increasing subsidy, with fixed costs such as the use of High Speed One (HS1)’s infrastructure jumping by up to 10 to 11 per cent. “We’ve lobbied for a reduced cost of access to HS1 infrastructure and the regulator has given a provisional determination, suggesting that the charges we will receive from next April will be lower,” he says.
While he ultimately expects “similar amounts of subsidy this year,” he’s confident reliance on state aid will dip in 2025 “as inflation starts to fall and we are able to reverse the trend.”
“Our ambition is to drive it right back down to whence it came.”
“Our ambition is to drive it right back down to whence it came.”
Reducing costs, private vs public ownership, and bringing track and train under one body are one thing, but the golden ticket for success in the railway industry has always come down to how many people actually buy a ticket.
The most recent data from the Office of Rail and Road (ORR) shows 1.6bn passenger journeys were made in Great Britain in the most recent year, 16 per cent more on 2023 but still seven per cent less than the 1.7bn journeys made in 2019, prior to the pandemic.
Passenger numbers have risen to around 128m since White took the helm, but it’s difficult to make a proper verdict given the figures are skewed by Covid. ORR data shows the operator is still around 50m below its pre-Covid total.
“The good news is the railway is getting busier, and we see very strong demand in the evenings on a Tuesday, Wednesday and Thursday,” White said.
That would indicate commuter numbers could be on the up again, but he admits the post-pandemic recovery has largely been in leisure.
“Southeastern Railway was a railway that really depended on commuters with season tickets. So pre-Covid, 52 per cent of our revenue came from commuters. That figure today is 18 per cent… so it’s a seismic shift.”
White is optimistic that business travel can improve, citing moves from Amazon and Google to mandate in-office work. Yet those developments are ultimately out of his control.
“The bad news is we are still significantly under-recovered and that is primarily due to less season tickets, because more people are hybrid working.”
The latest industry data shows commuters are typically travelling 2.7 days per week, compared to 3.9 pre-Covid.
Whether or not White can close that gap will be a key factor in Southeastern’s prospects.