The Rail Regulator has exposed the truth behind train company claims about Britain’s rail network

Maria Eagle

As inspiring names go, the Office of Rail Regulation report “GB rail financial information 2011-2012” won’t win any prizes. Yet, if you have time to wade through statistics and figures, this new report exposes the truth behind the claims made by the private train operators about the amount of money they put into our rail system.

Put simply, it reveals that train companies are paying less to the taxpayer than the amount they receive in public subsidies. It’s true, as Ministers and train bosses like to boast, that the government received £1,558m in franchise payments from the train companies in 2011-12. We hear less about the even greater £1,609m of public money paid out in revenue support and other subsidies to these private companies, a net loss of £51 million to the taxpayer. Despite this, train companies manage to make significant profits while increasing fares by as much as an inflation-busting 9 per cent each year. And all this is without including the £3.9bn of public investment that goes into the industry through Network Rail, funding that also benefits the train operators of course.

There does happen to be one operator that reinvests all of its profit in the services it runs, makes one of the largest returns to the taxpayer each year and receives the least subsidy. That company is East Coast Main Line Ltd, a subsidiary of the government-owned not for dividend train operator, Directly Operated Rail.  Despite this success, Ministers have unbelievably decided to focus their efforts on a costly and unnecessary privatisation of InterCity rail services on the East Coast. As a consequence, other franchise competitions have been pushed further back in the queue, requiring Ministers to offer very lucrative contract extensions to the existing train operators. It makes no sense to sell off this service and Labour is clear that the Government should abandon this ideological plan.

Maria Eagle is the Shadow Secretary of State for Transport

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