Passenger train operators contribute over £700m to  DfT

Latest ORR analysis shows that there has been little annual change in the net contribution – the difference between payments made to and received from the DfT – by the franchised passenger train operators over the previous year.  In 2015/16 the net contribution from 18 TOCs totalled £732.9m as against £731.4m in 2014/15.

However the composition was different. The net contribution is made up of three different components: the actual net franchise payments; additional revenue support/share schemes; and PTE grants (where applicable).

The net franchise payments – the difference between premiums paid to the DfT less support received from  – fell  14.5% to £1,240.4m (2014/15: £1,450.1), but this was offset by a 36.0% drop in revenue support to £381.1m (2014/15: £595.9m).

(Revenue support/revenue share is part of the DfT money-go-round system whereby TOCs are compensated should revenue fall below a threshhold stipulated in the franchising agreement; when the opposite occurs the excess revenue is shared with the DfT).

The third element – the PTE grant – increased 2.9% to £126.3m (2014/15: £122.8m). Northern was the only beneficiary of this payment.

Total passenger kilometres increased  1.0% to 62.160 billion (2014/15: 61.271 billion), but total passenger premium per passenger kilometre remained unchanged at 1.2 pence.

The analysis was confined to 18 TOCs and showed wide regional variations. 11 TOCs returned premiums to the DfT whereas the other seven were supported.

The three largest DfT contributors were SWT (£388.2m), GTR (£278.6m) and VTEC (£204.4m). The three largest recipients of state aid were ScotRail (£292.6m), Northern (£249.1m) and ATW (£159.7m). In terms of cost per passenger kilometre, ATW was the most ‘expensive’ (13.1p), while Southern (+6.2p) and SWT (+6.1p) were the most ‘profitable’.

                               Subsidy/Premium breakdown by Train Operating Company (£m)
TOC Net franchise payment Revenue support/share PTE grants Total subsidy/premium Pence per passenger kilometre
Abellio Greater Anglia -126.0 -1.9 -127.9 -3.3
Arriva Trains Wales (ATW)   155.2   4.5  159.7 13.1
C2C   -37.8  -37.8 -3.3
Caledonian Sleeper     16.9   16.9   9.1
Chiltern (Ch)   -29.5  -29.5 -2.3
Cross Country (CC) -198.2 121.5  -76.7 -2.2
East Midland Trains (EMT) -165.9   87.8  -78.0 -3.3
Govia Thameslink Railway (GTR) -278.6 -278.6 -3.8
First GWR   -90.9   -90.9 -1.5
London Midland (LM)     42.6     42.6   1.6
Northern   122.7 126.3   249.1 10.7
ScotRail (ScR)   292.6   292.6 10.2
South West Trains (SWT) -568.5 180.3 -388.2  -6.1
Southeastern     69.1 -16.5     52.7   1.2
Southern -101.1     5.4   -95.7  -6.2
TransPennine Express (TPE)     14.6     14.6   0.7
Virgin Trains East Coast (VTEC) -204.4 -204.4  -3.8
Virgin Trains West Coast (VTWC) -153.2 -153.2  -2.2
Totals -1,240.4 381.1 126.3 -732.9 -1.2

Source: ORR

Note: Minus figures denote premiums/payments to the DfT. The Southern figures refer to 1 April to 25 July 2015 (after which the franchise was absorbed into GTR).

London Overground (LO) and Merseyrail (MR) results were not included in the above analysis but shown separately. Both LO and MR received contracted grant payments and neither body bears revenue risk. Support for LO came to £31.2m (2014/15: £26.1m), and that for MR was £72.3m (2014/15: £86.2m). Pence per passenger kilometre figures for 2015/16 were LO (3.3p) and MR (10.4p).



In terms of pence per passenger-kilometre, Arriva Trains Wales is the most expensive franchishe operation.
In terms of pence per passenger kilometre, Arriva Trains Wales is the most expensive franchise operation.

ORR: Government subsidy by Train Operating Company 2008/09 to 2015/16





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