Train operators gained £2.7bn from taxpayers' subsidy last year

date: 11 October 2012

embargo: 00.01hrs Friday 12 October

Rail unions and transport campaigners today (Friday) warned that rail franchising was fundamentally flawed and unsustainable after it was revealed that train operating companies (TOCs) made a £2.7bn net gain from taxpayers last year.

Analysis of official figures shows that in return for paying £1.17bn in premium costs to run services companies received total public subsidies of £3.88bn.

The figures, published this week by the Department of Transport, come as the government prepare to make an announcement on the future of the West Coast Mainline currently operated by Virgin.

Virgin last year made a £133m net gain from taxpayers' subsidies which helped the company achieve pre-tax profits of nearly £40m, of which £29m went to shareholders.

The research shows that the taxpayer subsidy given to Virgin is seven times higher than that awarded to state-run East Coast Mainline, which last month reported operating profits of £7.1m that will be re-invested back into the service.

Passengers and campaigners from the Action for Rail campaign will today hold protests at train stations throughout the country warning that the cost of franchising has resulted in the most expensive fares in Europe and that the government is planning to close ticket offices, and de-staff trains and stations.

This activity will include a protest at 8am at London Euston station that will be attended by ASLEF General Secretary Mick Whelan, TSSA General Secretary Manuel Cortes and RMT Assistant General Secretary Mick Cash.

Campaigners will also be lobbying MPs on the day, calling for West Coast to be returned to public ownership as part of their wider campaign for an end to privatised rail.

Action for Rail Chair and TUC General Secretary Designate Frances O'Grady said:

'These figures show the true nature of our privatised railways - a system of corporate welfare where train operators make a play of bidding for contracts knowing that their future revenue is underwritten by the taxpayer.

'The franchising process is fundamentally flawed and unsustainable. Ministers must learn from the East Coast Mainline which has shown that public operated railways can be more efficient and deliver better value for money.

'Instead of allowing public subsidies to end up in the pockets of shareholders the government should be using this money to invest in services that puts passengers first.'

NOTES TO EDITORS:

Level of public subsidy by Train Operating Company

-The above table shows total subsidy figures for each Train Operating Company. This is then broken down by franchise payment, revenue support and Network Grant. Network Grant per TOC represents the indirect funding provided through Network Rail's subsidised track access charges for each TOC. Total passenger mileage is taken from the ORR data and a total subsidy is calculated from this.

- Action for Rail is a campaign run by the TUC in partnership with ASLEF, RMT, TSSA and Unite. More information can be found at: www.actionforrail.org

- In addition to the protest at London Euston there will also be protests at the following stations: Nottingham, Birmingham New Street, Solihull, Derby, Wolverhampton, Sandwell & Dudley, Walsall, Leicester, Leeds, Hull, Doncaster, Sheffield, Harrogate, Beverley, Brough, Warrington Bank Quay, Hartford, Bolton, Lancaster, Basingstoke, Bournemouth, Bristol Temple Meads, Reading, Plymouth, Edinburgh Waverley, Glasgow Central, Glasgow Queen Street

- Follow the TUC on Twitter: @tucnews

- On Saturday 20 October thousands of people from across the UK will be heading to London for A Future That Works - a march which starts on the Embankment and ends with a rally in Hyde Park. The day is being organised by the TUC in protest against the government's austerity measures and calls for a new approach which puts growth and an economy that works for ordinary families at the heart of government policy www.afuturethatworks.org

Contacts:

Media enquiries:
Liz Chinchen T: 020 7467 1248 M: 07778 158175 E: media@tuc.org.uk
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk
Alex Rossiter T: 020 7467 1337 M: 07887 572130 E: arossiter@tuc.org.uk