Franchised train operators ‘in the black’ for the first time

For the first time franchised TOCs paid out more in premiums than they received in payments, ORR’s GB rail industry financial information 2014-15 discloses. It also confirms that government support for the industry continues to decline despite an increase in the network grant paid to Network Rail.

These are the main findings for 2014-15 (1 April to 31 March), the first year under the new control period CP5 (2014-19).

Total government support fell 7.1% to £3.519bn (2014: £3.788bn), and its percentage portion of total income dropped to 25.7% (2014: 28.5%). When adjusted for inflation, government support was £1.1bn less (37%) than 2010-11, while the fare-paying passenger has paid an extra £1.2bn (17%) over the same period.

More detailed analysis of the 19 franchised train operating companies shows that 11 TOCs earned premiums, up two on the previous year. The improvement was largely due to a 39.1% reduction in track access charges, slashed to £1.275bn (2014: £2.095bn); a result of ORR’s PR13 (Periodic Review) ruling made while the last control period was in place.

Premiums increased 24.6% to £1.564bn (2014: £1.255bn) but payments fell 34.8% to £0.905bn (2014: £1.389bn), resulting in a first time surplus of £659m (2014: £134m loss) for the franchised passenger sector.

Only two franchises -South Western and East Coast -made a net contribution to government finances overall, with surpluses of £120m and £28m respectively (see table 2).

TOC passenger income increased 7.5% to £8.770bn (2014: £8.160bn) largely reflecting a 4% increase in passenger numbers and a real term rail fare increase of 1%. TOCs earned an additional £795m (2014: £772m) from car parking and train catering facilities.

Network Rail income was 22.9% down at £2.282bn (2014: £2.961bn), but the network grant was up 14.3% at £4.177bn (2014: £3.653bn) to accommodate.

NR income is drawn from three main sources: fixed track access charges, down 69.9% at £440m (2014: £1,464m); variable track access charges, up 38.2% to £865m (2014: £626m); and other income, which was 12.2% up at £977m (2014: £871m). The latter category included income from the following sources: property (£283m); stations (£258m); freight operators (£74m); depots (£65m); open access operators (£27m) and Schedule 4 net income (£201m).

ORR stresses TOC data is drawn from statutory sources but companies have different accounting periods, formats and accounting policies, which should be borne in mind when interpreting the results.

 

   T1    Source of government funding 2014-15 (2013-14), £m
 
          TOCs Network Rail        Total
Department for Transport -1,371 (-769) 3,738 (3,382) 2,367 (2,613)
Transport Scotland      289  (506)     426   (256)    715     (762)
Welsh Government      159  (152) –          –    159     (152)
Transport for London        64    (68)        13    (15)      77       (83)
Passenger Transport Executives      200  (178) –          –    200     (178)
Totals    -659  (135) 4,177 (3,653) 3,519  (3,788)

Notes: Minus figures denote net payments to DfT. PTE grants: 2015 (£119m Northern Rail & £81m Merseyrail); 2014 (£178m, Northern Rail).

 

 

T2  Summary of industry income and government support  by franchise 2014-15 (2013-14)
(a)+(c)-(b) =(d)

£m

Payments (a) Premiums (b) NR grant (c) Net government support (d)
Essex Thameside –          (-)      18    (4)   54 (45)   36 (41)
Chiltern –          (-)      29    (9)   81 (60)   52 (50)
Cross Country        –    (31)      66    (-) 302 (271) 236 (302)
East Coast * –          (-)   233 (217) 205 (194)  -28 (-23)
East Midlands        –    (13)     74     (-) 201 (246)  127 (258)
Greater Anglia –          (-)   182 (164) 289 (261)  107 (97)
Great Western –          (-)   100 (118) 371 (336)  271 (218)
Northern   249 (346) –          (-) 397 (323)  645 (669)
Southeastern     26  (69) –          (-) 336 (255)  363 (324)
Southern –          (-)   202 (153) 244 (244)    42 (90)
South Western * –          (-)   380 (297) 260 (246) -120 (-51)
Thameslink Great Northern –          (-)   175 (195) 184 (220)     10 (25)
Trans Pennine Express     44  (66) –          (-) 176 (144) 220 (209)
Wales & Borders     93 (152) –          (-) 209 (180) 302 (331)
West Coast     –         (-)     105 (97) 310 (322) 205 (225)
West Midlands     59   (57) –          (-) 167 (167) 226 (225)
London Overground     64   (68) –          (-)    55 (59) 119 (127)
Merseyrail      81 (82) –          (-)    46 (43) 127 (125)
ScotRail    289 (506) –          (-) 289 (38) 579 (544)
Totals 905 (1,389) 1,564 (1,255) 4,177 (3,653) 3,519 (3,788)

Notes: includes results where franchise ownership may have changed to ensure continuity.                * denotes net contribution.

 

ORR, GB rail industry information 2014-15

http://orr.gov.uk/__data/assets/pdf_file/0015/21039/gb-rail-industry-financial-information-2014-15.pdf

Leave a Reply

Your email address will not be published. Required fields are marked *