|
The performance of the privatised train operators
By Jean Shaoul
A Catalyst Working Paper
Published: September 2005
ISBN: 1 904508 18 9
Paperback: 33 pages
This report on the finances of the private train operating companies
was commissioned by Catalyst from Professor Jean Shaoul of Manchester
Business School. Based upon an in-depth analysis of company accounts
alongside public expenditure data, it establishes that train operators
have secured healthy dividends for shareholders by raising fares, spending
less on staff, and claiming large sums in annual public subsidy:
- The combined total income of train operating companies, including
both fare revenues and public subsidies, rose by 26 per cent from 1997
to 2003, from £4.8 billion to £5.8 billion.
- Passenger fares rose by 24 per cent over this period, faster than
the rate of inflation. Although a “cap” was intended to
keep fare rises below inflation, this only applies to some ticket types.
Companies have compensated by pushing up the price of other journeys.
- Labour costs have been cut by reducing staffing levels and allowing
wages to fall behind average earnings. This is likely to have been
a key factor explaining the poor performance record of the railway
in recent years, since British Rail’s workforce was already the
most productive of any rail service in Europe.
- Government subsidies to train operators have never been less than £1
billion a year and in 2003-04 reached £1.8 billion. Subsidies
have formed a significant portion of train operators’ total combined
income, remaining at around 20 per cent in recent years.
- Subsidies allowed companies to pay dividends of £160m to their
parent companies in 2003, an exceptional post-tax return on equity
of 174 per cent. Since privatisation at least £890m has been
taken out of the industry in dividends paid to parent companies. Without
public subsidies, the train operators would have made a loss every
single year.
“This report shows that taxpayers, fare-payers and railway
workers are being mugged by profiteering privateers whose sole aim
is to maximise profits and payouts to shareholders. Massive amounts
of public money are going into the industry, but the private sector
is leeching it out again as profits and handing their parent companies
and shareholders massive dividends while services are still worse than
in British Rail days.”
- Bob Crow, General Secretary, RMT
Jean Shaoul is Professor of Public Accountability in the Division
of Accounting and Finance at Manchester Business School. She has authored
numerous reports on the privatisation and regulation of public infrastructure
industries as well as on NHS finances, the Private Finance Initiative,
international regulatory reform, public expenditure and corporate accountability.
Download
PDF
“New study exposes profiteering” – RMT,
13 September 2005
“A Future for Rail” – Catalyst
research programme
Top
|
 |
Pamphlets cost £5 each and are available from
Central Books. They can be ordered by credit card on 020 8986 4854 or
by cheque from: Central Books, 99 Wallis Road, London, E9 5LN (plus 75p
p&p). They are also available by subscription.
To read PDF documents you will need Acrobat Reader installed
on your computer. If you do not have a copy you can download it free from
Adobe.
Publications
list
|
