by Phil Marsh

Train numbers 1. - Rail passenger subsidy down announces Department for Transport as Government financial support increases

Published: 23rd February 2015

Train numbers 2. - Record passenger numbers last year says Office of Rail Regulation.

Two sets of rail statistics have been released by the rail authorities which show a reduction in the public subsidy for each passenger journey mile combined with a continuing increase in passenger numbers to record levels.

The Department for Transport (DfT) says that the overall subsidy to franchised rail companies was reduced from 7.3 to 6.8 pence per passenger mile in the financial year ending April 2014 over the previous year. The calculation to derive these figures is no doubt as complicated as is the rail franchise system but the DfT explains that the subsidy is made up of:

(a) subsidy paid directly to train operators by government figures published by the Office of Rail Regulation (ORR) based on passenger kilometres, converted to miles.

(b) an allocation of the Network Grant (that is, payments made directly to Network Rail) calculated by taking the total network grant, apportioned according to each franchise’s share of fixed track access charges.

But overall, the rail industry received £5.3bn of government support or £227 million more than the previous year which appears poor but reflects the massive rail investment underway. This was the fourth successive year the government received more money back from train operating companies as part of their franchise agreements than it paid in subsidies. In 2013-14, the government received £40m. But it is extremely complicated…..

NOTE: The following chart shows how your local train company performed who gets what subsidy and where a ‘minus’ figure is shown, this is a payment to the DfT rather than a subsidy.

Money go-round?

In 2013 to 2014, 3 train operators had a negative subsidy per passenger mile, meaning that First Capital Connect, South West Trains and East Coast Trains paid the government a larger premium than the effective subsidies they received via the Network Grant payment to Network Rail. East Coast Trains of course is a fully owned subsidiary of the government as is Network Rail so it could be described as a bit of a departmental money-go-round.

But this should not demean the achievements of that company to be taken over by a Stagecoach and Virgin joint venture from March 1st. Northern Rail received the highest subsidy per passenger mile of 51.5 pence per mile in 2013 to 2014 but this does not necessarily suggest they are the worst performers but that they operate the most unremunerative routes. The network grant paid to franchises helps pay the fixed track access charges to franchised train operators.

Rail subsidies down nearly 40% in five years

Over the last five years rail subsidies have fallen nearly 40% figures released by the DfT show. During 2013-14, franchised train operators were paid 6.8p per passenger mile (PPM) down by 39% compared to 2009-10 when the figure was 11.1p a mile.

There is a wide level of subsidy ranging from Northern Rail being paid 51.5p PPM and First Capital Connect (FCC) who generated a ‘profit’ to the DfT of 3.9p PPM. It’s a complicated piece of mathematics but given the increase in passengers the expectation would be that the PPM would reduce.

The last two governments have followed a long-term strategy to move the railway financial burden from taxpayers to passengers which is why inflation plus a set percentage increase has happened every January.

They said:

A DfT spokesperson said: “Passenger numbers are at record high levels and this growth is expected to continue. “The UK government provided more than £2bn of net subsidy in 2013-14, helping keep trains running right across the country.

The Union view was provided by Mick Cash, acting general secretary of the RMT union who said that whichever way these numbers are “spun”, they show that rail franchising is a “one-way ticket to the bank for the private train companies”.

He added: “With another windfall heading their way from the inflation-busting rise in fares, it is no wonder that the British people are sick of these scroungers and parasites milking our railways for their own benefit.”

Mr Cash, in common with his colleagues never acknowledge how railway safety has improved and employment has grown along with pay in the last 20 years in the rail industry.

Rail journeys across Britain jumped by 5% to 1.3bn in 2013-14

Passenger numbers rose by 5% across the UK in the last financial year the Office of Rail Regulation (ORR) has announced. Rail journeys increased by over a million a week by 63.6m to 1.3billion journeys.

The latest figures show that journeys between regions increased 3.2% to 434.8million journeys in 2013-14. Commuter routes between London and the East of England / South East increased by 4.2% to 125.6 million journeys and by 2.9% to 191million respectively.

Only Wales saw a decrease in journeys to 9.1 million or 1.3% out of the UK’s regions due to less traffic between Wales and the North West, South West and London. These numbers were affected by the storm damage to the Cambrian lines though. Journeys between England and Scotland reached 7.9million, up by 3.1% over the previous year.

The following table shows the rise in rail travel from its low point 20 years ago when British Rail was split into over 100 companies and the subsidy increased by a factor of three. The railways are now generating double the amount of rail journeys than 20 years ago and railfreight has also seen huge growth.

1994-95 735.1million journeys

1995-96 761.2

1996-97 801.4

1997-98 845.7

1998-99 891.9

1999-00 931.0

2000-01 956.6

2001-02 959.6

2002-03 975.5

2003-04 1011.7

2004-05 1039.5

2005-06 1076.5

2006-07 1145.0

2007-08 1218.1

2008-09 1266.5

2009-10 1257.9

2010-11 1353.8

2011-12 1460.0

2012-13 1500.9

2013-14 1586.5

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