1 May 2014
Article by Andrew Minnis, National Assembly for Wales Research Service
On 16 April 2014 the Office of Rail Regulation (ORR) published its report GB rail industry financial information 2012-13, one of a series of publications produced by the ORR as part of its transparency programme. This edition is the third annual publication of rail financial information for Britain.
The report’s analysis focuses on Network Rail and franchised passenger operator income and expenditure. However it recognises the importance of freight and open access passenger operations and the report includes high level analysis of their financial contribution.
The analysis presents financial information at national, regional (including Wales, England and Scotland) and train operator level allowing comparisons to be drawn. This provides an insight into the comparative cost of rail in Wales, not least in terms of the extent to which Welsh railways depend on Government funding. This is relevant both to preparations for the next Wales and Borders Franchise and discussions currently underway between the Welsh and UK Governments on further devolution of rail powers.
Some key figures and comparisons for Wales include:
¡ UK and Welsh Government contributions to the rail industry in Wales provided 56% of total industry income in Wales, comprising 17% (£96m) paid to train operators and 39% (£221m) paid to Network Rail;
¡ In comparison, for Britain as a whole Government contributes 31% of total industry income, with a net payment of less than 1% (£38m) to train operators, and the remainder (£4bn) paid to Network Rail.
¡ UK and Welsh Government funding represents £9.33 per passenger journey in Wales (compared to £2.67 per journey in Britain as a whole, £7.60 in Scotland, and £2.19 in England), and £0.19 per passenger kilometre in Wales (compared to £0.07 for Britain as a whole, £0.17 for Scotland, and £0.06 in England).
¡ Arriva Trains Wales’ total income was £293m, of which £116m (40%) was passenger income, £131m (45%) was franchise receipts from Government and £46m (16%) was classed as “other” income.
¡ Total franchise train operator income for Britain as a whole was £9.7bn, of which £7.683bn (79%) was passenger income, £1.279bn (13%) franchise receipts from Government and £0.739bn (8%) from “other” sources. It should be noted that Government also received premium payments from franchise operators of £1.241bn so that Government in Britain as a whole made a net contribution to franchise operators of just under £0.038bn.
¡ For Arriva Trains Wales, 34.4% of passenger income is from regulated fares, and 65.5% from unregulated fares. This is broadly in line with the figure for Britain as a whole where 34.5% of passenger income is from regulated fares.
Note: Regulated fares see a cap applied to the total value of fares in a specified “fare basket”. Each autumn the UK, Welsh and Scottish Governments set out how much the total fare basket can increase based on RPI for July of the previous year. Unregulated fares are determined commercially by each train operating company.