The gravy train: Rail firms make £3.5 billion profit – from OUR subsidy – while the service fails

Passengers have reacted in fury to fare rises [Image: Getty].

The Office of Rail and Road tells us that, in 2015-16, the total amount of government subsidy – the money we pay to the rail companies, despite the railways having been privatised in 1994 – was £3.999 billion.

So seven-eighths of that amount – almost all of it – has been taken as profit by the people named in the extract below.

Almost none of it has been used to improve the service and it certainly seems unlikely that any of it is being used to keep rail fares at a reasonable price.

This leads inexorably to the obvious question:

Isn’t it time the Conservative Government ended the rail subsidy?

It certainly isn’t being used for the intended purpose – “operating, maintaining, renewing and enhancing the railway”.

And it certainly isn’t helping passengers.

Isn’t it time we shunted this subsidy into the sidings and told the money-grubbing controllers to fend for themselves?

Private train operators have creamed off £3.5billion from running our railways over the past 10 years.

These gigantic profits come despite passengers having to deal with overcrowding, delays, cancellations, strikes and among the highest ticket prices in Europe.

It got worse yesterday as fare increases averaging out at 2.3% were introduced .

A Daily Mirror investigation, probing for the first time the true cost of rail privatisation, has found that tens of millions of pounds are spent on fatcat wages.

Instead of being ploughed back into the network, improving services and cutting rail fares, much of this cash was paid out in dividends to wealthy owners.

£1,300,000: Stagecoach chief exec Martin Griffiths received this last year. The firm has made £659million profit over 10 years

£10,000,000: National Express deputy chairman Jorge Cosmen and his Spanish family bagged this sum in dividends last year

£1,787,000: David Martin, Arriva’s ex-chief exec, walked away after getting this much in 2015… and he got £1.6million in 2014

£7,000,000: Tim O’Toole, chief executive of First Group plc, has been handed this massive sum over the past five years

£479million: The huge dividend handed out by Sir Richard Branson’s Virgin UK Holdings

£3,300,000: Dean Finch, chief executive of National Express, can certainly afford to smile after raking in this colossal amount in 2015

£1,300,000: What David Brown, chief executive of Go-Ahead Group received in 2016, a year after scooping even more – £2.1million

£17,000,000: Stagecoach founder Sir Brian Souter also got £8.4m as chief executive at the firm between 2010 and 2013

£17,000,000: Fellow Stagecoach founder Ann Gloag, who owns 26% of the company with Souter, shared £17 million in dividends this year

Source: All on board the gravy train – rail firms’ £3.5billion profit despite passengers’ fury at dire service

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12 thoughts on “The gravy train: Rail firms make £3.5 billion profit – from OUR subsidy – while the service fails

  1. NMac

    As the figures above show privatisation was only ever about the Tories and their chums making a great deal of money at our expense. Those figures don’t appear to include the money paid out to the foreign state-owned rail companies who run some of the so-called private rail operations. We even subsidise European rail travel in France and Germany because, under the Tories, although our own government isn’t allowed to run a rail service foreign governments are allowed to run them. Bring Back British Rail and, given the same subsidies the private operators get, I am certain we would get a far better service.


  2. Neilth

    This is scandalous. Public money is effectively being put into private pockets for doing nothing except ruining public transport in the U.K. The reality is that these huge subsidies actually amount to publically funded transport with none of the control over policy. It’s time the Tories admit that this is yet another of Thatcher’s policies designed as a deliberate attack on the Trade Union movement.

    Thatcher hated the Unions and made it her priority to particularly attack the ‘big three’ industries, Coal, Rail and Steel, the heart of the industrial base of the UK. She succeeded in destroying Coal, ruined Steel and crippled Rail and to her delight weakened the Unions.

    The other consequence was the destruction of the UKs manufacturing base and the increased prominence of the Financial Sector which still produces huge financial instability in the markets due to unfettered and unsustainable speculation. The various economic crashes and crises that so destabilise our and the worlds economy were the predicted outcome of this change.

    The Tories are directly to blame for this but I don’t expect them to accept that blame.
    They have no sense of shame.

    1. NMac

      Agree with all you say, except that in fact so-called privatisation of the railways came under John Major’s government and, if I remember correctly, was rushed through shortly before the 1997 election in order to try to get them through before a Labour Government was elected. Sadly Blair’s government didn’t unravel it all as it should have done.

      1. Mike Sivier Post author

        Yes, privatisation happened in 1994. I’ve made that perfectly clear, I thought. You’re right about Blair’s government.

      2. Neilth

        Oops, I sit corrected on that but the privatisation was part of the Tory plan to castrate the labour movement and hand over public money to their donors and supporters.

      3. Mike Sivier Post author

        Yes indeed. I doubt they intended these privatised companies to end up in the hands of other countries’ state-owned industries, though.

  3. Dez

    Taxpayers bailing out the Bwankers was a bitter pill but this latest info just blows the lid off this idiot Governments running of this country.

  4. Barry Davies

    Undoubtedly EU law will be a huge obstacle to any renationalisation scheme – especially one that aims to do away with competition and markets. The EU is clear that its objective is “Opening up national freight and passenger markets to cross-border competition”. Its directives and regulations have created what can only be described as a legal quagmire.

    The main EU law in this area was the First Railway Directive (which was replaced and upgraded in 2012 with a new version). This was the original law that gave the Tories the excuse they needed to introduce their privatisation agenda in the nineties. That law enshrined the role of the private sector by making it a legal requirement for independent companies to be able to apply for non-discriminatory track access on a member state’s track, calling for:

    “separating [of] the management of railway operation and infrastructure from the provision of railway transport services, separation of accounts being compulsory and organizational or institutional separation being optional.”

    The 2012 Directive has kept that principle and goes even further, and says that one of its aims is “to boost competition in railway service management”. It also stipulates that: “Greater integration of the Union transport sector is an essential element of the completion of the internal market… The efficiency of the railway system should be improved, in order to integrate it into a competitive market”.

    In short, this means that multiple train operating companies must be allowed to use the same track competitively. In Germany it has resulted in the state-owned Deutsche Bahn facing more and more competition from other firms.

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