Morning:
14°c
Train firms' finances hit by downturn
Danny Brierley22.01.09
SOME of Britain's rail firms are facing financial difficulties because of the economic downturn, a senior civil servant has warned.
The director-general of rail at the Department for Transport Mike Mitchell said a "traffic light" system monitoring their financial health had shown a "red light" for "a small number of companies". Mr Mitchell told the Commons public accounts committee the economic downturn was "having an effect" but revenues across the industry were "holding up reasonably well".
This week rail bosses met Transport Secretary Geoff Hoon to plead for permission to cut services to save costs in the face of falling revenues.
But Mr Mitchell said he expected passenger numbers to carry on growing this year. Last year a record number of people travelled by train, but there was a fall in the rate of growth to less than 5 per cent, down from a 7.8 per cent increase in the previous year.
The Government has attempted to use the growth in passenger numbers to make the railways less reliant on public subsidy. National Express East Coast, which runs long-distance services from Kings Cross to the North, and London's biggest commuter franchise South West Trains are both due to pay more than £1billion over the next decade to the Treasury. There is no suggestion either is in financial difficulty.
But the Association of Train Operating Companies warned in a memo of a "potentially devastating" effect from the downturn.
Reader views (11)
Despite all the state money that's poured in, these greedy companies are still fleecing the passenger and then they have the brass neck to push fares up even further and then complain that they are in financial difficulties. How my heart bleeds. It's high time this ludicrous set-up was abandoned.
Bring back British Rail - all is forgiven!
- Brian L, Glasgow, Scotland
No need to worry Rail Companies - do as you always do - pass it on to us the poor fare paying customer!
- Brunel, Bristol.
Don't the millions of pounds they still get in State Subsidies go some way to help . . . ?
The railways in the South East ran PERFECTLY the year before privitisation when they were trying to attract buyers - showing that the State could have run it properly if it wanted to.
- Roz, Chamonix, France
Time to re-nationalize the railways.
- Vince London, West London
Didn't thay put a bit away for a rainy day after 10 yrs of economic boom and massive profits.
- Kev, London-UK
RE-NATIOALISE THE RAILWAYS.
- Mark Burton, St Ives Cambs
Can I ask the proprietors to form an orderly queue outside No. 11 Downing Street, where a Mr. A. Darling will be more than happy to give them some of my tax?
- Nobby Clark, Perth, Scotland
No one makes this clear, but each operator has to pay back £millions to the government, growing every year, as part of their franchise agreement. This grows per year. So NatEx is looking at eg. £30 million this year, £60 million next year, £90 million the year after and so on etc. It's the system that doesn't work and a stupid idea with all these franchises.
- Toby, Wimbledon
WWith the huge increase in fares each year (mine, this year was 8%), what exactly are they doing with this money. Giving the bosses huge bonuses?
- Sue, Orpington, Kent
If they run their finances just like they run their trains then no wonder they are in financial difficulty. Tough - a lot of companies are in financial difficulty and can not increase their prices. They've priced people off the trains and now they are crying.
- Jk, Kent
Can anyone explain how a 5% increase in passenger volume coupled with a 6% to 8% increase in fares can amount to "falling revenues"? Or are we talking about the 'stealth tax' of falling Government subsidy for the rail industry?
- Colin, London
