n 2012/13 Virgin trains received indirect subsidies of £298m through Network Rail’s grant, and paid back £104m to the government in franchise payments. During this same period, East Coast received £187m in indirect subsidies and paid the government £203m. East Coast, therefore, returned a net payment of £16m to the government, while Virgin Trains received £194m in taxpayer subsidies. Virgin paid out £40m in dividends to shareholders during this period. In addition, on the West Coast Main Line, between 1997 and 2012 Virgin-Stagecoach Group received £1.9bn in net subsidies, and made a cumulative profit of £674m. Nearly all post-tax profits over this period, some £460m, were paid out in dividends to shareholders and parent companies, as compared to the £370m paid to the government in franchise payments. According to the Centre for Research on Socio-Cultural Change (CRESC, 2013):- “This company operates in a space of politically constructed profit, because without this direct subsidy, the £674 million of cumulative profit could not have been found over the 16 years. Indeed, the £202 million West Coast Trains then paid as corporation tax on profits could be understood as simply the recycling of a small part of a much larger state subsidy back to the state.” The Department for Transport has linked re-privatising the East Coast to a new fleet of passenger trains, but these trains were in the pipeline anyway and could have been introduced with East Coast remaining in public hands. The government also claims that over the 8-year East Coast contract – the Virgin/Stagecoach consortium will pay £3.3bn to run the franchise. However, it is unclear what the net receipt to taxpayers will be, given that track access charges have declined by around 60% since privatisation in 1994. East Coast does need investment, but it’s a myth that this will mostly come from the private sector. Upgrades to the West Coast Main Line, at a cost of nearly £10bn, were substantially covered by the taxpayer. Research shows that genuine at risk private sector investment represents only about 1% of all the money that goes into our railway network. The contract for the East Coast Main Line has not yet been signed, and it is not too late for the government to stop the process and keep the line in public hands, in the interests of passengers and taxpayers. actionforrail.org/government-rushes-to-sell-off-east-coast-before-election/ Petition to keep East Coast Rail Public https://you.38degrees.org.uk/petitions/keep-east-coast-public Statement from the rail union RMT In 2009 National Express handed back the franchise for the East Coast Mainline (ECML) to the government. Abandoning the franchise was a disgraceful negation of the operator’s responsibility and inevitably caused huge uncertainty and disruption. Since the keys were handed back, public ownership (in the form of Directly Operated Railways Ltd) has provided an improved service and vastly more revenue for the Treasury. Specifically, according to answers to questions tabled by the RMT Parliamentary Group, Directly Operated Railways Ltd has (since November 2009) paid £602m in premium payments. This is £232m more than National Express paid back during its tenure and over £209m more than the amount paid in by Virgin/Stagecoach on the West Coast Mainline since 2009-10. And ECML in the public sector is virtually subsidy free. Public subsidy accounted for only 1.2% of ECML’s total income in 2011-12, compared to an average of 32.1% of the income of the private train operating companies on the 15 other passenger rail franchises. Despite this, the Conservative-led government is ideologically wedded to returning ECML to the private sector. Manuel Cortes, leader of the TSSA rail union, agrees: Manuel said: This is nothing short of economic vandalism by a Chancellor who does not want voters to know the truth about the East Coast line - it is a public sector success story. It has been the cheapest franchise to run for the past five years and it has produced the greatest return to taxpayers, over £600 million. By selling it off before the election, he wants to hide those facts. We have the highest fares in Europe because we are the only country with a fragmented privately run rail network. l-r-c.org.uk/news/story/east-coast-main-line-outrage/
Posted on: Sat, 29 Nov 2014 12:34:49 +0000
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