2016

Transformed finances support investment in better railway

Rail journeys have grown at average of four per cent a year for almost two decades.

  • Railway has turned £2billion a year day-to-day loss for taxpayers into £200million gain
  • Passengers paying more of the cost of the railway - now 71 per cent
  • Train operator net payments to government up from £60million to £800million in five years
  • Taxpayers have benefitted from a £2.2billion transformation in the finances of Britain's railway which is helping to support investment in better services, a new rail industry report reveals.

Fuelled mainly by huge growth in the number of people travelling by train, 1.7 billion last year, the railway has gone from making a £2billion a year loss in 1997-98 in terms of its day-to-day costs to making a net contribution to government of £200million in 2014-15. The figures are part of new analysis by the Rail Delivery Group (RDG), which represents train companies and Network Rail.

The financial turnaround means that effectively, the government’s £3.5billion annual spending on the railway is supporting capital projects to build the bigger, better network the country needs.

Passengers are paying a greater share of total rail costs, which include the cost of capital projects, 71 per cent in 2015 compared to 57 per cent in 2011. The rise is due mainly to an increase in passenger numbers rather than higher fares - the average price paid for a single journey increasing by three per cent in real terms over the same period.

According to the RDG, franchising has proven effective at capturing the value of passenger growth to benefit the public purse. Net payments from train companies to government have increased dramatically from £60million in 2010-11 to £800million in 2015-16.

In the last five years, government funding to operators has decreased by more than £1.1billion with passengers making up the difference. Conversely, since 2010 spending by Network Rail on enhancements to the railway has doubled from £1.5billion to £3billion.

Paul Plummer, RDG chief executive, said:

“The railway has gone from swallowing billions of pounds of taxpayers’ money just to keep trains running to now contributing £200million a year to improve services. As revenue has risen because more people are travelling, it has benefitted passengers through increased investment in making journeys better and taxpayers through a lower bill for running and improving the railway.”

Notes to editors:

The Rail Delivery Group’s annual dataset on industry finances, performance and investment is available on our website.

The dataset is based on analysis of publicly available data from the Office of Rail and Road and a range of other sources.

As per the Office of Rail and Road’s data portal, all figure for total government support exclude DfT loans to Network Rail.

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