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Privateer rail giants subsidised to the tune of £4 billion

Office of Rail Regulation reveals public money is still lining shareholders' pockets

A huge £4 billion of public money is still being thrown at the private railway industry — much of which is going straight into shareholders’ pockets, a new report revealed yesterday.

The Office of Rail Regulation (ORR) publication showed total government funding for railways in 2012/13 amounted to £4bn, including £700,000 from Transport Scotland and £100,000 from the Welsh government.

This represents almost a third of the rail industry’s total income.

Meanwhile soaring fares have also left passengers covering an increased proportion of railways’ income at almost 60 per cent — or £7.7 billion.

That compares with 57.4 per cent in 2011/12 and 55.6 per cent in 2010/11.

ORR chief executive Richard Price said the public had “a right to know where the money goes.”

The TUC along with rail unions RMT and TSSA said the scandal reinforced the call to end franchising and bring the industry back into public ownership.

TUC general secretary and Action For Rail chairwoman Frances O’Grady said: “Today’s figures show just how dependent rail firms have become on the public purse.

“Taxpayers’ money that should be spent on improving services is instead being siphoned off into shareholders’ pockets.”

The three largest dividend payers — Northern Rail, TransPennine Express and Virgin Trains — together paid out nearly £100m last year after receiving over £1bn in public funds.

“The government’s determination to re-privatise the East Coast mainline — even though it is delivering the biggest cash surplus of all — shows it has learned nothing from past mistakes,” Ms O’Grady added.

RMT acting general secretary Mick Cash said the British public was being fleeced for “mind-blowing sums of money.”

He commented: “The case for bringing the whole rail network under public ownership and ending the scandals of subsidy and revenue support is absolutely overwhelming and it’s about time that the politicians of all parties took note.”

TSSA leader Manuel Cortes slammed the subsidy as “the economics of the madhouse.”

He said: “The facts clearly support our argument that publicly owned franchises like East Coast offer a much better deal than privately run franchises like Virgin.

“Like the rest of Europe, we should run a socially-responsible, publicly owned rail network.”


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