Rail travellers pay twice!

19 April 2013

Taxpayers last year made contributions of £4 billion to privately owned Train Operating Companies (TOCs). ‘You would think this was a significant amount to contribute to the companies’ begging bowls,’ says Mick Whelan, ASLEF’s general secretary. ‘But it’s only the start. If these people actually want to go on a train, they are obliged to make more ‘charitable contributions’ to the franchises – amounts that increase all the time.’

Mick was speaking as the Office of Rail Regulation released figures showing the increases in the amount of rail costs paid by passengers, rather than central government. ORR said:

· fares accounted for 55.8% of TOCs in 2010/11. Now they amount to 57.6%.

· last year passengers paid out £7.2 billion of fares. This was a rise of 8.7%.

‘The economics of the railways are a mystery to behold,’ Mick says. ‘Rail is growing. It is more popular than it has ever been. So shouldn’t passengers expect to benefit from using a service that is increasingly used? Isn’t that how it works?

‘And the ORR also records that rail costs fell by 2.1% last year. Surely this should be reflected in lower passenger charges?

‘Private companies don’t hesitate for a moment to raise prices if their costs go up. But it also seems that they also raise their prices if costs go down.

‘Is it any surprise that ASLEF wants a complete review of rail financing?’

Mick points out that politicians jostle with each other to talk about ‘eliminating transport poverty’, the opportunity of ordinary people to access affordable travel. ‘Charging them more, twice, for the same service is a very bizarre way of seeking to achieve this!’ he says.

Meanwhile,as he points out, the private investors in TOCs make money hand-over-fist for no risk whatever.

‘These ORR figures show that we need to revisit financing. Our view is that the case for change is self-evident. But if free-market bigots need more evidence, part of the exercise must be to keep the East Coast Mainline in public hands so there is a not-for-profit comparator.’



Maria Eagle, the Labour Shadow Secretary of State for Transport says:

· train companies are paying less to the taxpayer than the amount they receive in public subsidies

· £1,609 million of public money is paid out in revenue support and other subsidies to these private companies

· the government receives £1,558 million in franchise payments from the train companies;

· so the taxpayer loses £51 million.

And, she adds, ‘ Despite this, train companies manage to make significant profits while increasing fares by as much as an inflation-busting 9% each year. And all this is without including the £3.9 billion of public investment that goes into the industry through Network Rail, funding that also benefits the train operators.’

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