Fewer journeys as passenger income declines
INCOME from passenger fares in 2017-18 fell by 2.4% to £9.8 billion, according to the Office of Rail and Road (ORR).
The fall in farebox revenue mirrors a decline in the number of passenger journeys over the same period of 1.4%.
The figures, released in the ORR’s latest rail industry financial information on January 30, reveal that passengers now provide more than half of the railway’s income, with government funding for Network Rail and train operators only accounting for a combined 36% of the £19.4bn total income.
Government contributions increased by 8% to £3.8bn, which the ORR attributes to reduced franchise payments to the Government. The Department for Transport (DfT) also lent more money to Network Rail - £8.4bn compared with £6.1bn in 201617.
The cost of running the railways was calculated at £20.6bn, up by 1.4% from 2016-17, and largely credited to increased financing costs for Network Rail.
Around 57% of industry costs were incurred by train operators, 38% on managing the network, and 5% by freight, High Speed 1 and Northern Ireland Railways.
Network Rail spent £3.3bn on enhancements in 2017-18, which the ORR says is the largest annual investment in rail infrastructure in recent years. Dividends paid by franchised train operators were £0.2bn - 27% less than in the previous year but 6.5% higher than in 2013-14.
Just one train operator made a net payment to the Government when state funding of infrastructure is accounted for - East Coast paid £87m into government coffers. The most heavily funded operator was Northern, which received £668m of government funding, followed by ScotRail (£633m).
Expenditure per passengerkilometre was highest on the Wales route at 46p, followed by Sussex (43p) and Scotland (38p).
At £8.6bn, franchised train operator costs made up the biggest source of the rail industry’s total expenditure of £20.6bn. Network Rail costs are next highest at £7.6bn, with government payments to train operating companies the third biggest category (£2.9bn).
Taking an average of franchised passenger operator expenditure, the ORR says this has increased by 11.9% over the last five years, with the largest increase being in payments to government (up 34%). Operationally, the biggest increases were for rolling stock (a rise of 21.3% over five years) and staff (up 19.1%).
However, because the number of passengers in 2017-18 was higher than five years previously, train operator expenditure per passenger-kilometre actually
fell - by 1.3%. ‘Other operating expenditure’ also fell in the same period, by 15.8%.
For Network Rail, depreciation was the single biggest cost, accounting for £2.8bn (or 32%) of its total of £8.6bn. Financing costs of £2.1bn were the next biggest cost at £2.1bn (24%), followed by maintenance at £1.4bn (16%).
At the announcement of the figures, RMT General Secretary Mick Cash attacked train operator dividends, saying: “The hard truth is that another £300 million that could have been invested in guaranteeing safe staffing levels and improving services has been siphoned out of the railway in dividends by the greedy private train operators, while they have slashed their returns to the public purse by the same amount.”