PROFITEERING ON ‘GREAT BRITISH RAILWAYS’

RMT helpline 0800 376 3706 :: november/december 2021 :: RMTnews 12 T he Southeastern franchise joined Scotrail, Wales and Borders, the East Coast Mainline and Northern Rail in public ownership last month due to the continuing failure of the private sector. Meanwhile rail workers face a pay freeze and job cuts and passengers face above inflation fare rises all to ensure that Britain’s railways continue to be a cash cow for privateers. RMT research has revealed just some of the ways in which the private sector is extracting public money and fare revenue and turning it into private profit and we assess the scale of the looting that is being licenced, past and present. £8.7 BILLION IN DIVIDENDS - 1996-2020 • Private companies operating and leasing trains have made at least £8.7 billion in dividend payments to shareholders since 1996. • Private train operating companies have extracted an estimated £3.2 billion in dividends from Britain’s privatised railways since 1996 (Table 1). • Rolling Stock Companies (ROSCOs) have extracted an estimated £5.5 billion in dividends from Britain’s privatised railways since 1996 (Table 1). £955 MILLION IN TOC PROFITS - 2020-27 When the government steps in to bail out the private train operators, it puts them on management contracts for six months called Emergency Measures Agreements. The government take on all the revenue risk from plummeting passenger fares and covered all industry costs, while at the same time guaranteeing the TOCs a two per cent profit in the form of a management fees. Department for Transport data show that these managements fees – guaranteed profits – amounted to £98 million between March 2020 and September 2020, around £40 million of which is likely to go overseas (Table 3 - Appendix 1). TABLE 1: THE COST OF DIVIDENDS PAID TO PRIVATE TRAIN AND ROLLING STOCK COMPANIES SINCE PRIVATISATION 1996-2010* 2010-2020** Total post-privatisation TOCs £1,000,000,000 £2,185,899,000 £3,185,899,000 ROSCOs £2,520,000,000 £2,998,736,430 £5,518,736,430 Total £3,520,000,000 £5,184,635,430 £8,704,635,430 *Source: Rebuilding Rail (Transport for Quality of Life, 2012) **Source: RMT analysis of franchisee company accounts, 2010-2020. PROFITEERING ON ‘GREAT BRITISH RAILWAYS’ TABLE 3 - PROFITS FROM EMAS AND ERMAS Franchise EMA Total EMA fees Projected ERMA Projected ERMA Owner Management payable (2%) fees over fees over Fee (1.5%) 18 months (1.5%) 12 months (1.5%) Chiltern £1,414,000 £1,885,000 £4,242,000 £2,828,000 Arriva (Deutsche Bahn) Cross Country £4,368,000 £5,386,000 £13,104,000 £8,736,000 Arriva (Deutsche Bahn) East Midlands £3,598,000 £4,798,000 £10,794,000 £7,196,000 Abellio (Dutch state railways) East Anglia £4,627,000 £6,169,000 £13,881,000 £9,254,000 Abellio (Dutch state railways) Essex Thameside £1,071,000 £1,428,000 £3,213,000 £2,142,000 Trenitalia (Italian state railways) Great Western £10,815,000 £13,911,000 £32,445,000 £21,630,000 FirstGroup South Eastern £7,973,000 £7,973,000 £23,919,000 £15,946,000 Nationalised as of October 2021 South Western £7,525,000 £10,033,000 £22,575,000 £15,050,000 FirstGroup (70%)/MTR (Chinese state, 30%) Thameslink, Govia (comprising Go-ahead Southern and £14,077,000 £17,831,000 £42,231,000 £28,154,000 65% and Keolis 35%) Great Northern TransPennine £2,156,000 £2,876,000 £6,468,000 £4,312,000 FirstGroup Express West Coast £8,484,000 £11,313,000 £25,452,000 £16,968,000 FirstGroup(65%) Trenitalia (35%) Partnership West Midlands £4,095,000 £5,187,000 £12,285,000 £8,190,000 Abellio (Dutch State railways) and two Japanese private firms Abellio ScotRail £6,654,823 £8,873,098 £19,964,469 £13,309,646 Nationalised as of March 2022 Caledonian Sleeper £392,518 £497,189 £1,177,554 £785,036 Serco TOTAL £77,250,341 £98,160,287 £231,751,023 £154,500,682 TABLE 2: PROFITS FROM GOVERNMENT CONTRACTS 2020-27 Train operation contracts Profits EMA profits (1 March 2020-1 September 2020 £98 million ERMA profits (1 September 2020-1 April 2022) £231 million National Contract profits (2022-2027) £626 million TOTAL £955 million