Private rail firms make £3.5 billion profit

Meanwhile, passengers battle delays, overcrowding, cancellations, strikes and the highest ticket prices in Europe (and fares go up AGAIN)

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Rail firms' £3.5billion profit despite passengers' fury at dire service

Private train operators have creamed off £3.5 billion from running our railways over the past 10 years.

These gigantic profits come despite passengers having to deal with overcrowding, delays, cancellations, strikes and among the highest ticket prices in Europe.

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It got worse yesterday as fare increases averaging out at 2.3% were introduced.

A Daily Mirror investigation, probing for the first time the true cost of rail privatisation, has found that tens of millions of pounds are spent on fatcat wages.

We scrutinised the accounts of 10 private firms involved in running train services and found they made £407million in profits last year alone.

Instead of being ploughed back into the network, improving services and cutting rail fares, much of this cash was paid out in dividends to wealthy owners.

The Mirror is calling for the rail industry to be re-nationalised.

£1,300,000: Stagecoach chief exec Martin Griffiths received this last year. The firm has made £659million profit over 10 years


Mick Cash, general secretary of rail union the RMT, said: "More than two decades of rail privatisation has turned Britain's vital transport services into nothing more than a money-making racket while passengers are left to rot in hell on rammed, expensive and unreliable trains.

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"The case for kicking these spivs off the tracks and bringing Britain's railways back into public ownership is overwhelming."

£10,000,000: National Express deputy chairman Jorge Cosmen and his Spanish family bagged this sum in dividends last year


Passengers are also backing the calls for change and lashed out at fare rises.

Leeds student Holly Carvath Stubley, 19, said: "You don't get a great service and most of the time you don't get a seat – and it is really overpriced. The railways should be nationalised. It would improve the service and make it more accountable."

Credits: PA£1,787,000: David Martin, Arriva's ex-chief exec, walked away after getting this much in 2015... and he got £1.6million in 2014 (Photo: PA)

Vincenzo Maggio, 40, from Cambridge, said: "Things are going backwards."

To add insult to injury, many routes are run by nationalised rail industries from other countries, including Germany's Deutsche Bahn.

Go-Ahead chief executive David Brown rec­­eived £3.4million in the past two years; and National Express boss Dean Finch got £3.3million in 2015.

FirstGroup plc chief executive Tim O'Toole has received £7million over the past five years, while Arriva boss David Martin got £1.8million in 2015 before he stood down in late 2015.

Credits: LNP£7,000,000: Tim O'Toole, chief executive of First Group plc, has been handed this massive sum over the past five years (Photo: LNP)

Passengers' cash also ends up lining the pockets of the owners of the operating companies. These include Stagecoach's biggest shareholders, co-founders Sir Brian Souter and his sister Ann Gloag. Their 26% stake earned £17million in dividends this year.

As chief executive, Sir Brian got £8.4million from 2010 to 2013. Virgin trains' UK parent company Virgin UK Holdings, ultimately owned by Sir Richard Branson, paid out a £479million dividend last summer.

Credits: PA

£479million: The huge dividend handed out by Sir Richard Branson's Virgin UK Holdings (Photo: PA)

Our probe also looked at Keolis, Abellio, Serco Group, and MTR Corporation.

The Rail Delivery Group, which rep­­­­­resents operators, claimed that profits are lower than those found by the Mirror – averaging at 3%.

It insists 97p of every £1 in fares goes into "running and improving the railway" yet failed to mention fatcat pay or the millions spent by operating firms on bidding to run new franchises. The Rail Delivery Group said: "Since 1997, when rail franchising was introduced, the railway's finances have transformed.

"In the late 1990s it cost taxpayers £2billion a year just to keep the trains running but following huge passenger growth rail companies now pay money back to the Exchequer.

£3,300,000: Dean Finch, chief executive of National Express, can certainly afford to smile after raking in this colossal amount in 2015


"This means billions more to spend on improving services."

Virgin Trains said since taking over the West Coast franchise nearly 20 years ago, it has transformed a business "dependent on significant government subsidies" into one that "regularly pays more than £100million a year to the Government".

£1,300,000: What David Brown, chief executive of Go-Ahead Group received in 2016, a year after scooping even more – £2.1million


Merseyrail, run by Serco and Abellio, said any "excess" profits are shared with local transport body Merseytravel.

Go Ahead said: "In the past year our rail division generated £222.4million for the Government and we paid £24.8million in corporation tax."

Credits: PA£17,000,000: Fellow Stagecoach founder Ann Gloag, who owns 26% of the company with Souter, shared £17million in dividends this year (Photo: PA)


PA

£17,000,000: Stagecoach founder Sir Brian Souter also got £8.4m as chief executive at the firm between 2010 and 2013


Stagecoach Group said its rail companies contributed around £1billion in franchise payments to the Government last year "more than 10 times the level of profits". It added bosses' pay matches their "significant responsibility for running dozens of companies around the world".

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