Mar 2009 - The Mystery of Railway Finances

01 June 2013

BEFORE privatisation, you could always understand railway finances, even if you didn’t like what was going on. You could look at a balance sheet that listed income, expenditure and subsidies. It wasn’t difficult. Since the 1993 Railways Act, however, railway finances look as if they’re run by the Masons. They are obscure, mystifying and impenetrable.

For example, are the railways profitable or not? That should be an easy one – but it’s not. Some evidence points to them making a mint. Last year the five biggest transport groups - Arriva, First Group, National Express, Go-ahead and Stagecoach - increased dividend payments between 10% and 33%. Then they increased fares by between 6% and 11%.

So, profits and prices are both up. Clearly, they are coining it.

But are they?

At this same time a civil servant was busy telling a Parliamentary committee that five franchises were being closely monitored by the Department for Transport because they are potentially in difficulty. Although the firms were not named (and why not?) the fingers are all pointing at the ‘big five’ public transport groups - Arriva, First Group, National Express, Go-ahead and Stagecoach.

The same five who were doing very nicely, thank you, only a paragraph ago!

But if the facts are impossible to penetrate, you can imagine what predictions are like. Sometimes I think these are produced by the same people who brought us ‘Blue Peter’.

The government ‘expected’, for example, that the eight franchises awarded most recently would turn a state subsidy of £811 million into a state profit of £326 million by 2012.

Exactly why they expected this, or how the public was to gain from private firms making vast profits, has never been explained.

But in any case the forecasters turned out to be as reliable as a second-hand Lada. Last month the TOCs turned up at Geoff Hoon’s office with their begging bowls. They thought they might run shorter trains, cut back on expansion and even suggested that the government might start helping out with the staff wage bill. Basically, they wanted to re-write their contracts.

Geoff Hoon apparently sent them off with fleas in ears, but I’d have been happier if he’d said, ‘That’s OK. If you can’t run the railways, the Department for Transport will.’

The fact is that every depot in the land has in its management team a number of rail professionals who understand and have a genuine sympathy for running efficient and popular transport services. The tragedy for our industry is that they are way down the pecking order after accountants, money-men and business graduates. Until these relationships are reversed, we will never have the integrated rail system that the country needs - and the voters crave.

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