Record levels of private investment in UK rail

Private companies invested a total of £925 million in Britain’s rail network in 2016-17, the highest figure recorded since the Office of Rail and Road’s data series began in 2006-07. Of this figure, £767m was spent on rolling stock.

The figures, released on October 11, also show that investment in stations totalled £52m, with £105m of private investment in other areas such as information technology.

ORR’s data also shows the level of subsidy received by franchised passenger operators. South West Trains pays the Government 2.1p in premium payments for every passenger-km, and Virgin Trains East Coast 0.4p.

All other operators are subsidised, with Northern Rail receiving 24.7p per passenger-km and ScotRail 20.7p. The lowest subsidy figure is for c2c, which receives 0.1p per passenger-km. However, including the Government’s direct support for Network Rail, franchised train operators received 5.1p for every passenger-km travelled.

Total net government support for the rail industry in 2016-17 (excluding Network Rail loans) was £4.2 billion, with £839m spent on High Speed 2, £266m spent on other areas, and £5m from Passenger Transport Executive grants.

This was offset by a £200m contribution from the City of London Corporation and £763m of premium payments from train operating companies (the latter down by £71m compared with 2015-16).

In real terms, government support fell by 12.5% due to Crossrail funding ending in the previous year. Since 2006-07, when government investment peaked at £7.5bn in real terms, state support has fallen by 43.7% in real terms.

Network Rail borrowed £5.7bn from the Government in 2016-17, compared with £7.4bn in 2015-16 and £6.5bn in 2014-15.

The level of government freight grants fell to its joint lowest level since this data series began in 2007-08, with £18m worth of Modal Shift Revenue Support Scheme grants awarded in 2016-17, a £4m decrease from the previous year.

Railway Industry Association Chief Executive Darren Caplan described the figures as “great news”, adding: “They show increasing private investment delivering upgrades to the UK’s rail system, ensuring even better service for lower cost.

“The rail supply sector is working with Network Rail to ensure the UK railways are open for business, implementing the recommendations of the Hansford Review on contestability.

“There is a big opportunity here for suppliers to get even more involved, and we look forward to working with them in the future to continue to get more third-party investment into the sector.”