RAIL OPERATORS RAKE IT IN

www.rmt.org.uk :: august/september 2007 :: RMTnews 13 2006/07 Train Operator Subsidy in £millions Arriva Trains Wales 145.3 C2C 18.5 Central Trains 211.9 Chiltern Railways 32 First Capital Connect -14.4 First Great Western 97.4 First Great Western Link -1.3 First ScotRail 275 Gatwick Express -15 GNER -13.3 Island Line 2.7 Midland Mainline 29.6 Northern 168.5 ONE 2.9 Silverlink 94.7 Southeastern 144.9 South West Trains 123 Southern 162 Thameslink -0.8 Transpennine 102.2 Virgin Cross Country 230.7 Virgin West Coast 221.3 Wessex Trains -0.2 Total 2,017.6 2005/06 Train Operator Subsidy in £millions Arriva Trains Wales 99.7 C2C -2.1 Central Trains 159.8 Chiltern Trains 12.1 First Great Western -26.5 First Great Western Link -4.7 First ScotRail 118.9 Gatwick Express -20.4 GNER -68.8 Island Line 3.1 Midland Mainline -6.3 Northern Rail 278.2 ONE -55.6 Silverlink 60 South Eastern Trains 50.7 South West Trains 50.7 Southern 106 Thameslink -53.4 Transpennine 66.2 Virgin Cross Country 150.6 Virgin West Coast 92.5 WAGN 6.5 Wessex Trains 57.1 Other -1.8 Total 1,082.5 Minus figures indicate that a premium was paid to the DfT The latest figures indicate that private train operators benefited from both increased fares and huge public subsidies in the last financial year. Fares have risen by an average of 6.8 per cent and public subsidy to the TOCs (excluding Merseyrail) virtually doubled to £2 billion in 2006/07 compared to just over £1billion in 2005/06 (see tables). The result has been a fuelling of private sector profits, notably at the First Group where there has been a 36.7 per cent increase in UK rail operating profits. The Department of Trade and, more significantly, the Treasury wants to reduce the overall level of public subsidies paid to the TOCs sharply by the middle of the next decade. Rail minister Tom Harris is talking of the need to “rebalance” TOC income between the farepayer and the taxpayer. FARE RISES This has led to a series of franchise agreements - GNER, First Great Western, SWT, First Capital Connect – being signed off which will see operators pay premium payments of between £800 million and £1.2 billion to the DfT. Profits, of course, are still protected. SWT, for example, will make around £20 million a year profit over the course of their franchise which runs until 2017. Unsurprisingly, the privateers’ response is to squeeze the passengers with fare rises in a desperate attempt to meet their premium payments. Arriva Trains Wales and SWT have recently announced off- peak fare increases of up to 34 per cent and 20 per cent respectively. Attempts by FGW to cut costs led to a passenger fares strikes and a shortage of rolling stock in the Bristol area. Arriva, awarded the Cross Country franchise in July 2007, will be able to increase unregulated fares by an average of 3.4 per cent above inflation every year. Additionally, the newly awarded West Midlands (Stagecoach) and East Midlands (Govia) franchises have also seen the new operators being allowed to set annual unregulated fare increases at an average of three per cent and 3.4 per cent above inflation. This applies to unregulated fares across the East Midlands franchise area and to the London-Northampton route in the West Midlands. So with direct public subsidy set to fall and unregulated fares permitted to rise by some 30 per cent above inflation over the next decade the only rebalancing seems to be from which trough the TOCs go to first to make their profits and pay shareholder dividends. In 2006/07 it was the £2 billion from the public purse, by the middle of the next decade it looks increasingly likely to be the farepayer. RMT general secretary Bob Crow said that allowing private train operating companies to hike up fares to protect their profits was unsustainable and irrational. “Pricing passengers off the railway will not increase rail use or encourage people to get out of their cars and onto the rail network.” he said. *The 2006/07 Annual National Rail Trends figures published by the Office of Rail Regulation on July 5 RAIL OPERATORS RAKE IT IN Train operating companies continue to profit from fare rises and the public purse strong substitute. He explained some of the process that the government was going though with the forthcoming white paper and said that the government was looking into creating both new rail lines and multi-tracking old lines. Asked by an audience member about the closure of rural lines as a cost cutting exercise, he said that it wasn’t something he wanted to see happen because among other things it simply “it is not true that huge savings will be made by cutting rural lines”. Linda Riordan MP wanted to see an expansion of railway line and routes, an expansion of railway stock and the further electrification of the tracks. Referring to the forthcoming government white paper she said: “I hope it puts people first and not profits”. Gerry Doherty, TSSA general secretary, spoke about routes to public ownership of the railways and had a clear message as to the way forward. “Take back each part of the network into public ownership one by one as franchises come to an end… The sooner we get it back, the better,” he said. Paul Plummer, a director of Network Rail Planning and Regulation was heard respectfully, but nevertheless had a hard time from some of the audience as he outlined some of the company’s business plan. He said in his defence that planned improvements “have taken time after Railtrack”. Stephen Joseph, director of Transport 2000, argued that to get more people using the rail network that the cost of fares was going to be the crucial issue. Stephen pointed to the exorbitant and often prohibitive price of a walk on fare compared to someone taking a decision to take a spur of the moment car journey. In the battle to get more people out of cars and onto trains, “fares are going to be the absolute critical issue,” he said.