Fresh privatisation row as figures show East Coast rail franchise turns £13million in profit

East Coast Train.
East Coast Train.

THE North East’s biggest rail operator generated £13million for the Treasury last year – sparking fresh anger over its privatisation.

The East Coast Main Line franchise turned the eight-figure profit at a time when other rail franchises required millions in subsidies to keep going.

Northern Rail – which serves smaller North East stations including Sunderland, Hartlepool, Seaham and Middlesbrough and Hexham – was the most expensive subsidise, receiving £495 million.

The East Coast operation runs services linking Newcastle to London and Edinburgh as well as other major and local stations including York, Durham and Berwick.

The service was brought back into public control as East Coast after operator GNER ran into difficulties with the franchise in 2006.

Labour has said the profit figures exposed the foolishness of re-privatising the line, which is currently run by a state-owned business but is due to be managed by Virgin Trains from March.

The figures were published in the annual financial report of the Office of Rail Regulation, the official regulator for Britain’s railways.

East Coast Main Line was one of only two rail franchises to make a profit for taxpayers. The other was South West Trains.

Virgin Trains, which runs the West Coast Main Line from London to Manchester and on to Scotland, received £221 million in subsidies.

A separate study by consumer group Which also found the East Coast Main Line had a good record for train delays, coming sixth out of 21 franchises for the lowest number of delays.

Labour’s Shadow Rail Minister Lilian Greenwood MP said: “These reports prove that the forthcoming East Coast sell-off is set to be a terrible blunder that puts privatisation ahead of passengers’ and taxpayers’ best interests.”

She added: “East Coast was one of only two train operating companies that made a net contribution to the Treasury once infrastructure costs were taken in to account.”

Labour plans to allow a state-owned operator to bid for future franchises, although this would still potentially allow private operators to run franchises if they win the bidding process.

The policy not supported by some Labour MPs who argue that franchises should simply be transferred to the public sector once they expire.

Rail Minister Claire Perry said: “We are investing record amounts in our railways as part of our long-term economic plan and passenger fares have a crucial role to play in funding these improvements, which will bring more services, more seats and modern trains.

“As we drive forward this huge investment programme, it is absolutely important that disruption to passengers is kept to a minimum.

“It is also important that we recognise passengers’ concerns about the cost of rail fares. This is why we have frozen them for the second year in a row.”

The Office of Rail Regulation said rail industry income from passengers in 2013/14 was £8.16 billion - a 10.8% rise compared with the figure for 2010/11 and 6.2% higher than in 2012/13.

Government funding for the railways in 2013/14 was just under £3.8 billion – a 16.4 per cent dip on the total for 2010/11 and 8.1 per cent down on 2012/13.

Total Government funding in 2013/14 varied from £1.88 per passenger journey in England to £7.77 per journey in Scotland and £9.18 per journey in Wales.

Government funding in 2013/14 represented 28.5% of the rail industry’s total income.

The number of passenger journeys increased by 16.6% (or by 260 million journeys) between 2010/11 and 2013/14, with the amount of freight carried rising 18.1%.

ORR chief executive Richard Price said: “There has been substantial growth in the use of the railways in the past four years. Passengers are increasingly the main funder of the railways, and must be central to developing plans for future services and investment.

“Our report also highlights that the rail industry has been successful in keeping costs stable despite carrying significantly more passengers.”