1 March 2021
RMT Press Office:
RMT research reveals COVID corporate cash grab scandal as privatised rail profits rack up to 15 pence of every pound passengers paid on fares.
As the Government increases passenger rail fares by 2.6% today, new research by RMT reveals that the 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. RMT is demanding an end to this shameless profiteering to allow all revenue profit to be reinvested in improving the rail network for passengers and ensuring a fair deal for rail workers.
Since March 2020, the private Train Operating Companies have been operating under Emergency Measures Agreements (EMAs) and Emergency Recovery Measures Agreements (ERMAs) through which the Government takes on all revenue risk, and funds the cost base of the franchise, whilst paying the operators a ‘management fee’ used to fund profits and dividends. Without this significant taxpayer support, the train companies would have become unviable.
Based on DfT data, RMT estimates that passenger numbers and hence revenue, since the beginning of the Covid pandemic in March 2020 averaged just 25% of pre-Covid levels over the whole year.
Despite this, the management fees and profits received by private train operators stand to be higher than £140m, equivalent to around 6% of all passenger fares collected last year. Shockingly, this is three times higher than the proportion of passenger revenue paid out as profit by the train operators prior to the pandemic, which averaged 2%.
The Government has also continued to pay rolling stock lease costs under the ERMAs, enabling the private rolling stock companies (ROSCOs) to continue profiting and they stand to make over £220m.
RMT estimates that the ROSCOs’ profits combined with the train operators’ fees stand to see a massive £370m in profit leakage to private rail companies last year, equivalent to around 15% or 15p in every pound of all passenger revenue collected during the pandemic.
At the same time as allowing this shameful profiteering, the Government is imposing a two year pay freeze on key worker rail staff who have kept the UK’s rail network running throughout the pandemic.
RMT believes that rather than allowing the private rail companies to profit in the midst of a pandemic, this money would be far better spent reinvested in the rail network, and scrapping the pay freeze imposed on rail workers.
RMT General Secretary, Mick Cash said;
“As the Government raises fares for rail passengers and freezes pay for rail workers its business as usual for the private rail industry. Rail companies raking in hundreds of millions of pounds in profit every year prior to the pandemic was bad enough but now in a corporate Covid cash grab scandal of epic proportions we learn they stand to actually increase the share they take in ticket revenues with profits equivalent to 15 pence of every pound passengers paid on rail fares.
“This pandemic profiteering is totally unacceptable and rather than lining the pockets of big business, this money would be far better spent being reinvested in improving the rail network for passengers, and scrapping the pay freeze imposed on key worker rail staff.
“The rail network has a central role to play in a green recovery from Covid-19 and its high time the Government ended the farce of privatisation once and for all and invested in creating a reliable, affordable, accessible, spacious rail network in public ownership which values its key worker staff and the vital role they play.”
|ROSCO||Year||Profit before tax||Dividend|
|Porterbrook*||Year ending December 2019||
|Angel Trains**||Year ending December 2019||
|Eversholt***||Year ending December 2019||
|Passenger revenue 2019-20 (England franchised fares - Source - ORR Rail Industry Finance)||
|Estimated passenger revenue 2020-21 (based on rail passenger numbers)||
|Estimate total management fees paid to Train Operating Companies under EMA/ERMAs in 2020-21||
|Management fees as a % of passenger revenue||
|ROSCO dividends paid in 2019||
|ROSCO dividends as a % of passenger revenue||
|Total ROSCO dividends and TOC management fees||
|ROSCO dividends and TOC management fees as a % of passenger revenue||
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Tagged with: Covid-19, TOC's, Train Operating Companies, ROSCO's, Rolling Stock Companies, EMA, Emergency Measures Agreement, ERMA, Emergency Recovery Measures Agreement, DfT, Privatisation, Tory Government
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