State support for privatised railway  tops £5bn again

Latest figures from the Office of Rail Regulation show that the cost of maintaining Britain’s private railway system has slipped back over the £5 billion mark.

Total government expenditure on rail peaked at £6.3bn in 2006/7, falling to £4bn in 2010/1. However, it rose again to £4,536m in 2011/2 and now stands at £5,060m for the current financial year (2012/3).

The breakdown consists of £3,780m in direct payments to Network Rail (2011/2, £3,475m); £1,536m in special funding projects (2011/2, £708m); £164m for PTE grant payments (2011/2, £214m); less £420m from TOC premiums (2011/2, £131m).

The sharp increase in special or additional funding is entirely due to Crossrail construction costs, which accounted for £1,205m in the last year (and taken total expenditure over the £5bn mark).

The ORR report chronicles state support to the rail industry since 1985/6, and gives individual TOC results for the last five years.

The latest findings show the 17 TOCs to be a varied and very mixed bag:  Eight returned franchising premiums totalling £1,330m, but nine are loss makers which needed £794 m in state subsidises. The resulting net difference yields a record net national premium of £537m. This compares with £230m (2011/2), and £129m (2010/1). No net premiums were paid in previous years.

South West Trains is the best performer with the biggest premium (of £315m), the best premium per passenger kilometre (at 5.4p), and has recorded consecutive improvements over the last five years. Southern, First Capital Connect and East Coast Trains have also done well.

At the other extreme, First ScotRail requires the largest subsidy (£291m), while Arriva Trains Wales is the costliest in terms of subsidy per passenger kilometre (at 12.2p). These two plus Northern Trains – all operating in difficult territories – represent the most expensive franchising operations by a considerable margin.

Separate arrangements apply for London Overground and Merseyrail. Both are loss-makers: in terms of subsidy per passenger kilometre, Merseyrail is the most expensive operation in the country (at 12.3p).

Of the £164m PTE rail grant split between the six English metropolitan counties, Greater Manchester (£64m) and West Yorkshire (£58m) hog the lion’s share. Nexus received £4m, but Centro got nothing at all for the second consecutive year.

State support for rail freight came to £17m in 2012/3 (the same as the previous year), and continues to decline from the £57m peak reached in 2001/2.

630/Sep 13

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