10.03.16
Franchise payments to government exceed support funding for first time
For the first time, rail franchises gave more money to the government than they received in net support funding last year, according to new figures from the Office of Rail and Road (ORR).
The ORR’s latest report on the financial state of the rail industry shows that in 2014-15 train operators made net payments of £0.7bn to governments, compared to receiving £0.1bn net support the previous year.
This was partly due to the government diverting funding from franchises to Network Rail. In real terms, net government funding of Network Rail has increased by £0.5 billion (12%) since 2013-14, but Network Rail’s total income has reduced by £0.5 billion as a result of ORR’s PR13 determination. It still has major debts, which it is considering selling off major stations to fill.
The report also shows that the financial health of railway operators has improved after last year’s figures found that one in four were losing money. All but two of the franchises are now running at a profit, but Cross Country and East Coast still have deficits of £8m and £10m.
Paul Plummer, chief executive of the Rail Delivery Group, which represents train operators and Network Rail, said: “Britain’s railway is an amazing success story and is becoming ever more important to the economy and peoples’ daily lives. Rail journeys have more than doubled in the last 20 years and money from fares now virtually covers the day-to-day cost of running the railway, helping to sustain one of the biggest investment programmes in its history.”
In total, the rail industry received £13.5bn income in 2014-15, with £8.8bn from passenger fares, £3.5bn from the government and £1.2bn from other sources of income such as parking and catering.
Industry income from passenger fares has increased by £0.4 billion (5%) since last year, as passenger journeys increased by 4%, especially in London and the south east, and fare increases went up by 1% in real terms.
The industry spent £13.6bn, of which £7.4bn was spent on train operations and £6.2bn on rail infrastructure.
Network Rail head Sir Peter Hendy told the London Assembly Transport Committee recently that an increased diversity of investment in new railway projects will be needed in the future.
(Image c. Alex Thorkilsden)