Gwyn Topham writes:
The state-run East Coast rail service requires
less public subsidy than any of the 15 privately run rail franchises in
Britain, according to a report from the rail regulator. The report comes after the coalition government
pledged to push the London to Edinburgh line back into private hands before the
next election, with a new operator taking over by February 2015. The route has been under the control of the
Department for Transport since November 2009 after the transport company
National Express pulled out.
While about half of all train operating companies paid premiums to the government last year, the report shows that passengers on every franchise were in effect subsidised when money spent on infrastructure was included. However, the net subsidy for East Coast was 1% of the line's income, compared with an average of 32%. The government paid £1.155bn directly to the private companies last year, while receiving £1.105bn back in franchise payments, £177m of which came from Directly Operated Railways, which runs the East Coast line. Train operators had income after expenditure of £305m.
Labour and rail unions said the report "exposed the truth" behind privatised rail companies. Maria Eagle, the shadow transport secretary, said: "These companies are paying less to the government than they are receiving in subsidies, even excluding the £3.9bn spent on infrastructure through Network Rail. It makes no sense for the Tory-led government to prioritise privatising the InterCity East Coast service over getting the rest of the industry back on track. East Coast makes one of the highest payments to government, receives the least subsidy and is the only route on which all profits are reinvested in services."
Manuel Cortes, leader of the TSSA rail union, said: "These figures show just why ministers are in such a rush to sell off the East Coast line before the next election. They demolish the Tory myth that private franchises are cheaper than publicly run franchises." However, the Association of Train Operating Companies claimed it was "a vast oversimplification to benchmark the financial performance of one franchise with another".
Michael Roberts, its chief executive, said: "Passengers and taxpayers are benefiting from a booming railway that is delivering better value for money. The railways are relying on less taxpayer support and a lower level of revenue per journey as train companies succeed in encouraging more passengers to travel by train. Train companies have reduced their unit costs in real terms, playing their part along with industry partners and government in improving rail's efficiency."
While about half of all train operating companies paid premiums to the government last year, the report shows that passengers on every franchise were in effect subsidised when money spent on infrastructure was included. However, the net subsidy for East Coast was 1% of the line's income, compared with an average of 32%. The government paid £1.155bn directly to the private companies last year, while receiving £1.105bn back in franchise payments, £177m of which came from Directly Operated Railways, which runs the East Coast line. Train operators had income after expenditure of £305m.
Labour and rail unions said the report "exposed the truth" behind privatised rail companies. Maria Eagle, the shadow transport secretary, said: "These companies are paying less to the government than they are receiving in subsidies, even excluding the £3.9bn spent on infrastructure through Network Rail. It makes no sense for the Tory-led government to prioritise privatising the InterCity East Coast service over getting the rest of the industry back on track. East Coast makes one of the highest payments to government, receives the least subsidy and is the only route on which all profits are reinvested in services."
Manuel Cortes, leader of the TSSA rail union, said: "These figures show just why ministers are in such a rush to sell off the East Coast line before the next election. They demolish the Tory myth that private franchises are cheaper than publicly run franchises." However, the Association of Train Operating Companies claimed it was "a vast oversimplification to benchmark the financial performance of one franchise with another".
Michael Roberts, its chief executive, said: "Passengers and taxpayers are benefiting from a booming railway that is delivering better value for money. The railways are relying on less taxpayer support and a lower level of revenue per journey as train companies succeed in encouraging more passengers to travel by train. Train companies have reduced their unit costs in real terms, playing their part along with industry partners and government in improving rail's efficiency."
A spokesman for East Coast said: "The facts speak for themselves. We're also proud of our record of improving customer satisfaction to the highest level ever on the line and ensuring consistently better train punctuality, as well as returning £640m to the taxpayer over the last three and a half years. We estimate that this figure will be in excess of £800m by the end of this current financial year."
The Office of Rail Regulation's report also reveals that passengers are shouldering a higher proportion of the cost of Britain's railways. Fares accounted for 57.6% of the industry's overall income in 2011-12 as state funding dropped almost 2%. Passengers on Scottish and Welsh services received a subsidy of £7.67 and £9.15 respectively for an average journey, compared with £2.27 in England.
Total passenger numbers on the railways increased by 7.2% in 2012. ORR chief executive Richard Price said the report "shone a light" on the funding of the rail network. "Taxpayers and rail customers have every right to know exactly where their money goes and what it delivers."
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