Rail firms’ £3.5bn profit despite passengers’ fury at dire service

run by nationalised rail industries from other countries, including Germany’s Deutsche Bahn.

Go-Ahead chief executive David Brown received £3.4million in the past two years; and National Express boss Dean Finch got £3.3million in 2015.

FirstGroup plc chief executive Tim O’Toole has received £7million over the past five The large dividend handed out by Sir Richard Branson’s Virgin UK Holdings

IN our capitalist system, profits are a payment for a combination of two things: a return on an investment and a reward for the risk of losing that money. In the railways, neither of these factors applies.

The train-operating companies in this investigation make no investment in the railways. They do not own the trains, the stations or the track. Moreover, there is no risk of bankruptcy. If a train firm gets into financial trouble, it can walk away years, while Arriva boss David Martin got £1.8million in 2015 before he stood down in late 2015. Passengers’ cash also ends up lining the pockets of the owners of the operating companies. These include Stagecoach’s biggest shareholders, co-founders Sir Brian Souter and his sister Ann Gloag. Their 26% stake earned from the contract. Train services have to keep running and the Government will take over. Of course, the companies pay for the odd improvement, such as better toilets or refurbished carriages, but that is taken into account in the bids for

£17million in dividends this year. As chief executive, Sir Brian got £8.4million from 2010 to 2013. Virgin trains’ UK parent company Virgin UK Holdings, ultimately owned by Sir Richard Branson, paid out a £479million dividend last summer.

Our probe also looked at Keolis, Abellio, Serco Group, and MTR Corporation.

The Rail Delivery Group, which represents operators, claimed that profits are lower than those found by the Mirror – averaging at 3%.

It insists 97p of every £1 in fares goes into “running and improving the railway” yet failed to mention fatcat pay or the millions spent by operating firms on bidding to run new franchises. The Rail Delivery Group said: “Since 1997, when

franchises. So it is effectively the Government that funds investment.

The huge sums paid to railway bosses are therefore undeserved. They are not risk-taking capitalists creating wealth. They are merely running a public service which cannot be allowed to fail. And ultimately the money is coming from us.

Christian Wolmar is author of Are Trams Socialist? Why Britain Has No Transport Policy.

rail franchising was introduced, the railway’s finances have transformed.

“In the late 1990s it cost taxpayers £2billion a year just to keep the trains running but following huge passenger growth rail companies now pay money back to the Exchequer.

“This means billions more to spend on improving services.”

Virgin Trains said since taking over the West Coast franchise nearly 20 years ago, it has transformed a business “dependent on significant government subsidies” into one that “regularly pays more than £100million a year to the Government”.

Merseyrail, run by Serco and Abellio, said any “excess” profits are shared with local transport body Merseytravel.

Go Ahead said: “In the past year our rail division generated £222.4million for the Government and we paid £24.8million in corporation tax.”

Stagecoach Group said its rail companies contributed around £1billion in franchise payments to the Government last year “more than 10 times the level of profits”. It added bosses’ pay matches their “significant responsibility for running dozens of companies around the world”.