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One in four train operators are losing money – ORR

A quarter of franchised train operators are losing money, according to figures released by the Office of Rail Regulation (ORR) today.

The rail industry regulator released its latest financial update, analysis of which showed that Chiltern, East Coast, Abellio Greater London, Southeastern and London Midland were making losses of between £1m and £8m, while the remaining 14 operators were in the black.

Northern Rail had the biggest profit at £29m, however it received £669m in subsidy from the government. The other 19 franchises together made a profit of £178m.

Going along with a growth of 16.6% in passenger journeys, revenue from passenger fares rose significantly to £8.2bn, an increase of 10.8% since 2010-11. Passengers have contributed an increasing proportion of the rail industry’s income relative to taxpayers over the past four years – up from 55.6% in 2010-11 to 61.5% in 2013-14, with the rest being made up from subsidy.

Across Britain, the state paid £3.8bn to Network Rail and train operators, with the Department for Transport’s contribution falling while the Scottish and Welsh governments’ contribution rose. Whitehall funding came in at £1.88 per passenger journey, while it was £7.77 per journey in Scotland, and £9.18 per journey in Wales. 

This was down from £4bn the year before. The subsidy has fallen 16.4% since 2010-11.

State funding accounted for 24% of the industry’s total income in England, compared with 55% in Wales and 61% in Scotland. The total cost of running Britain’s railways was £12.7bn, an increase of £0.15bn compared to 2012-13.

Commenting on the report, ORR chief executive, Richard Price, said: “There has been substantial growth in the use of the railways in the past four years. Passengers are increasingly the main funder of the railways, and must be central to developing plans for future services and investment. ORR’s report also highlights that the rail industry has been successful in keeping costs stable despite carrying significantly more passengers. Our industry financials publications provide an open and comprehensive explanation of industry income and expenditure to help passengers understand how the money they pay in fares is being used.”

Mick Whelan, the general secretary of the train drivers’ union Aslef, suggested that offsetting the industry surplus, of £593m, could mean 7% cheaper fares for passengers.

A spokesperson for the Rail Delivery Group representing rail operators and Network Rail said: “The regulator’s report shows why Britain now has one of Europe’s fastest growing railways.  As an industry we are focussed on improving services and attracting even more passengers and freight to travel by train while reducing taxpayers’ overall contribution.

“Backed by investment from successive governments and commitments made by train operators, we are determined to keep improving and have recently set out our commitments to build on the current success to deliver even better services that passengers and businesses need.”

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