Financial speculators driving up rail costs

Financial speculators driving up rail costs

17 August 2017

RMT Press Office

Two days after fares bombshell RMT analysis shows financial speculators driving up costs

 

Despite the claims of the Rail Delivery Group that just 3% of total fares paid end up in the pockets of train operating companies, RMT analysis shows how financial speculators also take their cut from the privatised rail industry.

 

This latest rail rip-off comes in addition to the millions stripped out by train operating companies and on top of the vast sums stripped out by the private contractors working on the rail infrastructure.

 

According to the Office of Rail & Road, 12% of fare money  - out of a total fare income £9.2bn - was spent on leasing trains from the private 3 rolling stock operating companies.

 

The same data shows that these 3 companies received £1.4 billion in 2015-16 but only experienced costs of £1.2 billion. This profit margin of 16.7%, £200 million, accounts for over 2p of every pound spent on a ticket or the equivalent of a fare cut of 2.1% could be achieved by taking the rolling stock into public ownership.

 

The so-called rolling stock “market” has been investigated a number of times due to lack of competition in what is basically a highly-secretive, government-sponsored racket.

 

The vast majority of rolling stock is currently owned by the following foreign-backed operating companies, which also highlights how little capital investment train operating companies actually make themselves:

 

Angel Trains owned by a consortium of infrastructure and pensions investors including AMP Capital Investors and Canadian pension investor PSP Investments .

 

Porterbrook owned by a consortium of infrastructure investors including Germany’s Allianz Capital Partners, Australian asset manager Hastings, Canada's Alberta Investment Management Corporation and EDF Invest of France

 

Eversholt Rail Group owned by CK Investments is jointly owned by Cheung Kong Infrastructure Holdings Ltd and Cheung Kong (Holdings) Ltd two investment vehicles backed by Li Ka-shing, one of Asia's richest men

 

RMT General Secretary Mick Cash said:

 

“If fare payers thought it was just the private rail companies that were bleeding them dry they ought to take a look at the shady world of the rolling stock companies.  These overseas outfits are creaming our railways for fat profits and have complete control over the crucial fleet operations and use that power to exploit the British passenger in what is nothing less than a government-sponsored racket.

 

“When RMT talks about public ownership we mean sweeping all these chancers and speculators off our railways and re-investing the fat sums they are pocketing back into services.  If we took this mob out of the equation we could cut fares, keep the guards and invest in the modernisation and upgrade works that our railways are crying out for.”

 

NOTES

 

  1. UK rail industry financial information 2015-16 (22 February 2017)http://orr.gov.uk/statistics/published-stats/uk-rail-industry-financial-information/uk-rail-industry-financial-information-2015-16
  2. House of Commons Libraryhttp://researchbriefings.files.parliament.uk/documents/SN03146/SN03146.pdf

“The bulk of the rolling stock (trains) that run on the railways are owned by three private companies (rolling stock leasing companies, or ROSCOs) – Angel, Eversholt and Porterbrook” 

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