RMT renews demands for all rail services to be renationalised

RMT renews demands for all rail services to be renationalised

1 March 2021

RMT Press Office:

RMT renews demands for all rail services to be renationalised on the day the Government extends its public ownership of Northern Trains.

RAIL UNION RMT today renewed its demands for all rail services to be taken into public ownership after the public owned Operator of Last Resort (OLR) was given a 5 year extension to its running of Northern.

On the same day that Government increased regulated fares by 2.6% and RMT published research that shows private train operating and rolling stock companies’ profits from last year stand to be equivalent to 15 pence of every pound passengers paid on fares during the same period.

The union is demanding an end, once and for all to the rail privatisation shambles to allow all revenue profit to be reinvested in improving the rail network for passengers and ensuring a fair deal for rail workers.

RMT General Secretary Mick Cash said;

“This announcement to keep Northern public is good news and something that RMT has been campaigning on for many years after repeated failures by the previous privatised operators.

“Make no mistake that this announcement is also a colossal admission of the failure of privatised railways by the Government.

“Privatised rail operators that cream huge profits out of our railways whilst operating a substandard service have no place in running our railways when looking to the post Covid-19 recovery and to fight the climate emergency we need a functional and publicly owned railway more than ever.”



Notes for editors 
·         Based on DfT data, between 1 March 2020 and 22 February 2021, passenger numbers on the national rail network averaged 25% of pre-Covid levels. RMT has therefore estimated that fare revenue collected in the last year to be 25% of passenger revenue from the year previous.  https://www.gov.uk/government/statistics/transport-use-during-the-coronavirus-covid-19-pandemic
·         Between March and September 2020, the Train Operating Companies were operating under Emergency Measures Agreements through which the management fee was capped at 2% of the cost base of the franchise prior to the pandemic. Following this, the TOCs were transferred on to Emergency Recovery Measures Agreements (ERMAs) for up to 18 months, and the management fee is capped at 1.5% of the cost base of the franchise under these arrangements. 
·         The Rail Minister recently stated that ‘Franchisees will remain in ‘lock-up’ for the duration of the Emergency Recovery Management Agreements (ERMAs), meaning that payment of dividends may not be made without the Secretary of State’s consent. Consent to the payment of a Permitted Dividend will not be unreasonably withheld or delayed, subject to franchisees fulfilling their financial obligations under the ERMAs to the satisfaction of the Secretary of State and complying with their Companies Act obligations. For any franchisee year the Permitted Dividend will be limited to the value of the fees paid to the franchisee net of Corporation Tax.’ [1] This is effectively a commitment not to unreasonably withhold dividends worth 100% the fees, subject to an assessment of performance.
·         The Government has confirmed that under the EMAs and ERMAs it is covering the costs of rolling stock lease payments in full. The rolling stock companies’ profits for 2020 are not known yet, but half year results from two of the rolling stock companies indicate that their revenues are up on the year previous. Half year results from Eversholt Rails Security Group suggest that its profits are likely to be up by around 70% over the year. Its  operating profit for the half year to June 2020 was £32 millionsignificantly higher than the same period the previous year and higher than its Full Year profits for 2019. [2]
·         RMT has based its calculations on the rolling stock company profits and dividends from 2019, although it may be the case that profits for 2020 were in fact higher than these figures: 
ROSCO Year  Profit before tax Dividend
Porterbrook* Year ending December 2019 99,897,000 £80,000,000
Angel Trains** Year ending December 2019 £114,300,000 £105,000,000
Eversholt*** Year ending December 2019 £31,726,000 £41,550,000
  Total £245,923,000 £226,550,000
The following table shows the estimated passenger revenue for 2020-21 and estimates of the management fees and rolling stock company profits as a proportion of this figure:
Passenger revenue 2019-20 (England franchised fares - Source - ORR Rail  Industry Finance) £9,400,000,000
Estimated passenger revenue 2020-21 (based on rail passenger numbers) £2,350,000,000
Estimate total management fees paid to Train Operating Companies under EMA/ERMAs in 2020-21 £143,832,500
Management fees as a % of passenger revenue 6.1
ROSCO dividends paid in 2019 £226,550,000
ROSCO dividends as a % of passenger revenue  9.6
Total ROSCO dividends and TOC management fees £370,382,500
ROSCO dividends and TOC management fees as a % of passenger revenue 15.8
·         Pre pandemic The Rail Delivery Group stated that ‘On average, around 98p in every £1 from fares goes back into running and maintaining services.’

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Tagged with: Northern Trains, Northern, Operator of Last Resort, OLR, Rail Fares, Covid-19, DfT, Rail Nationalisation