Ministers demand £100m cut in train lease charges
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.The Government has demanded that the companies which lease trains to the rail network cut £100m from the revenues they earn from the industry.
All three "Roscos" - HSBC Rail, Porterbrook, owned by Abbey National, and Angel Trains, owned by the Royal Bank of Scotland - have been in talks with the Department for Transport to try to persuade ministers to drop the plan.
The Roscos have come under fire from train company executives for allegedly earning excessive profits.
It is understood ministers initially asked the companies to put forward their own plan for reducing leasing fees paid by train operators. It is thought that at least one suggested that they could take a reduced income provided commercial risks were shared by train operators and the Government.
Unimpressed with the offer, ministers have insisted on a 10 per cent cut in Roscos' turnover.
Chris Garnett, the chief executive of the intercity operator Great North Eastern Railways, has expressed "amazement" that as trains got older and less reliable, the sum the operators paid to use them remained fixed.
And in his book On the Wrong Line, the specialist writer Christian Wolmar points out that Stagecoach has to pay HSBC Rail £850,000 a year for six 70-year-old trains, each with two coaches for the Isle of Wight service. "It is no wonder that each passenger on the short 8.5-mile railway is subsidised by more than £3," wrote Mr Wolmar. He said privately Stagecoach regarded the charge as an "outrage" but there was no alternative supplier.
Unless there is an agreement, ministers could encourage the participation of other financial institutions in the train-leasing business.
All three Roscos refused to comment.
One industry source pointed out that the three organisations had invested some £7bn since they were set up and about £5bn since the network was fully privatised in 1998.
She said annual pre-tax profits were between £150m and £200m, which did not amount to a "big return" on the investment.
The source pointed out that Porterbrook had been up for sale for three years and there had been "no takers".
A substantial reduction in revenue from the industry would not encourage investment in new rolling stock, the source said.
A spokeswoman for the Department for Transport said the White Paper "The Future of Rail" indicated that the rolling stock markets had not developed in the way that was expected at privatisation. The document said there was a case for investigating whether risks were placed most effectively to secure "best value". She said the Government was committed to developing a longer-term strategy for rolling stock to help the industry plan more effectively.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments