date: Wednesday 5 June 2013
embargo: 00:01 hours Friday 7 June 2013
Rail privatisation has failed to deliver for rail users and taxpayers and has brought in little private sector investment, according to a new TUC- commissioned report published today (Friday).
The Great Train Robbery - written for the TUC by the Centre for Research on Social-Cultural Change (CRESC) at the University of Manchester - shows that private train companies are heavily dependent upon the public purse to enable them to run services.
And when train companies do make a profit, barely any of it is re-invested in the railways, says the study. It reveals that those firms receiving the largest state subsidies spend, on average, over 90 per cent of their profits on shareholder dividends.
This contrasts sharply with the East Coast Mainline, which is currently state run and which re-invests all of its profits into improving the service.
The Great Train Robbery looks at many of the key objectives behind the decision of John Major's government to privatise the railways in 1994. The report questions whether any of these have been achieved:
Commenting on the report, TUC General Secretary Frances O'Grady said: 'This study explodes the myth that rail firms are bringing added value to our railways. In reality they rely upon taxpayers to turn a profit, virtually all of which ends up in shareholders' pockets, rather than being used to improve services.
'Rail privatisation has not brought the improvements its cheerleaders promised - the average age of trains has increased and most new investment is funded by the state.
'The claim that private train operators are responsible for more people using the railways must also be taken with a huge pinch of salt. Passenger growth has mirrored changes in the wider economy and is not the result of creative marketing drives by companies.
'The government must accept that the current model is broken. Its determination to impose franchising across the network - even on the East Coast Mainline which is performing well as a nationalised service - shows ministers are ignoring the evidence of 20 years of failure.'
CRESC Director Professor Karel Williams said: 'The privately owned train operating companies have hijacked the government's rail reform agenda which is all about 'getting franchising back on track'.
'Our research shows how the franchising system allows them to distribute profits at low cost from public subsidy.
'It would make sense to abolish the train operating companies and it would cost the taxpayer nothing if it were done as the franchises expired.
''Train and track operation could then be integrated under a new publicly-owned National Rail, operating within defined budgets over sustained funding periods.'
The Great Train Robbery says that:
NOTES TO EDITORS:
Net profits and dividend distribution rates for the top five recipients of public subsidy in 2011/12
Arriva Trains Wales |
First |
First TransPennine |
Northern |
Southeastern |
Top five subsidised |
|
Scotrail |
Rail |
|||||
Total train operating company net profit (TOC) 2007 - 2011 |
£59.4m |
£84.3m |
£167.4m |
£110.5m |
£82.4m |
£504.1m |
Total TOC dividends 2007-2011 |
£59m |
£83m |
£140m |
£117m |
£67m |
£466m |
Total percentage of profits issued in dividends |
99.4% |
98.4% |
83.6% |
105.90% |
81.3% |
92.4% |
Source: The Great Train Robbery
Network Rail v private investment in infrastructure and rolling stock 2008 - 2011(£ millions)
2008 |
2009 |
2010 |
2011 |
|
Network Rail |
5,270 |
6,208 |
4,983 |
4,756 |
Private investment |
549 |
425 |
468 |
312 |
Total |
5,819 |
6,633 |
5,451 |
5,068 |
Percentage funded by Network Rail |
90.6 |
93.6 |
91.4 |
93.8 |
Source: The Great Train Robbery
- A copy of The Great Train Robbery can be found at: http://www.tuc.org.uk/greattrainrobbery
- Network Rail is mainly funded through direct government grant. Track access charges (rents) paid by train operating companies constitute around 25 per cent of its revenue. In addition, investment is funded through borrowing on capital markets. Network Rail debt currently stands at £30bn and is projected to increase to £45bn by 2019.
- There are three ways in which train companies can receive taxpayers' subsidy; franchise payments, revenue support and indirect subsidies through the grant to Network Rail.
- The TUC's campaign plan can be downloaded from www.tuc.org.uk/campaignplan
- All TUC press releases can be found at www.tuc.org.uk
- Follow the TUC on Twitter: @tucnews
Contacts:
Media enquiries:
TUC:
Alex Rossiter T: 020 7467 1337; M: 07887 572130; E: arossiter@tuc.org.uk
University of Manchester:
Suzanne Ross T: 0161 275 8258; E: suzanne.ross@manchester.ac.uk
Professor Karel Williams M: 07775 514 173; E: williamskarel@hotmail.com
Want to hear about our latest news and blogs?
Sign up now to get it straight to your inbox
To access the admin area, you will need to setup two-factor authentication (TFA).