ORR Rail Industry Financials 2014/15

[WatcherZero]

Headline figures:
Government support for the rail industry was £4.8bn, down 9.3% on last year due to higher franchise payments, for fifth successive year Government received more in franchise payments than it paid out in operating subsidy, £802m up from £40m last year.

Government support to Network Rail was £3.8bn up £349m on last year, additionally £1.1bn was spent on Crossrail, £576m on misc grants for non-network rail projects, BTP and Passenger Focus, £18m on freight subsidy, £123m in PTE Subsidy (down £59m on previous year) a net reduction of £19m in non-network rail funding.

The Government received a net profit of 1.3p for every passenger km travelled (0.7p the previous year). On a individual Toc per passenger km basis subsidy for 2014/15 breaks down as follows.

Merseyrail 12.4p (down 0.3p)
Scotrail 8.6p (down 7.9p but mainly due to large amount of Scottish investment in previous control period being amortised)
ATW 8.5p (down 5p)
Northern 4.9p (down 2.9p)
London Overground 3p (down 0.5p)
London Midland 2.7p (down 0.1p)
Transpennine 2.3p (down 1.4p)
Southeastern 0.7p (down 1.5p)
FGW -1p (up 0.3p)
CrossCountry -1.4p (down 2.4p)
C2C -1.7p (up 0.4p)
Virgin West Coast -1.8p (down 0.2p)
Chiltern -2.5p (down 2.1p)
East Midlands -3.5p (down 3.7p)
Virgin East Coast -3.9p (operated one month during the year, up 0.1p)
Southern -4p (up 0.9p)
Greater Anglia -4.1p (down 0.4p)
FCC -4.5p (up 0.7p)
East Coast -5.1p (operated 11 months, down 1p)
South West -6p (down 0.9p)

Net Franchise payments
Merseyrail £86.2m up £2.7m
Scotrail £261.1m down £233.3m
ATW £101.9m down £51.6m
Northern £112.7m down £59.4m
London Overground £26.1m down £2.6m
London Midland £62.9m down £3.2m
Transpennine £43.5m down £18m
Southeastern £32.5m down £64.4m
FGW -£62.1m down £11.7m (must have carried fewer passenger km? We can probably put this one down to engineering disruption)
CrossCountry £47.3m down £79.7m
C2C £-18m down £14m (must have carried considerably fewer passengers)
Virgin West Coast -£93.7m up £8.5m
Chiltern £-30.2m down £25.2m
East Midlands -£82.6m down £86.2m
Virgin East Coast -£17.6m in one month
Southern -£187.4m down £21.9m (another where subsidy per passenger km has risen despite increasing franchise payments)
Greater Anglia -£187.1m down £26.8m
FCC -£80m down £74.7m (another where subsidy per passenger km has risen despite increasing franchise payments)
East Coast -£249.1m down £34.7m in 11 months
South West -£374.3m down £62.3m
Thameslink -£99.8m first year of operation

Private investment in the railways, Signalling £1m (up £1m), Rolling Stock £715m (up £392m), stations -£128m (first time sale of station assets such as land and buildings has exceeded station investment i.e. retail income, previously average £30m a year) Other £60m (down £12m).

http://orr.gov.uk/__data/assets/pdf_file/0005/18842/rail-finance-statistical-release-2014-15.pdf


So to pull out a couple of interesting nuggets from subsidy, only two Tocs had falling net franchise payments, Merseyrail and Virgin West Coast. Four Tocs saw rising subsidy per passenger km (FGW, C2C, Southern and FCC) all other tocs had falling subsidy, some as much as between a third and a half.

 

[LNW-GW Joint]

I think these figures paint an unreal picture of TOC performance because the Network Grant of £3.8 billion is excluded.
The ORR document links to a DfT spreadsheet which includes this, and we can then see the usual suspects (SWT and Southern) as the only really profitable TOCs.
https://www.gov.uk/government/publications/rail-subsidy-per-passenger-mile
To confuse further, the ORR calculates subsidy per passenger km, while the DfT shows it per passenger mile.

All the same, the reduction of subsidy is quite substantial for some TOCs, including the "basket cases" (eg Scotrail, ATW and Northern).
This must be from a combination of increased ridership and sharp fare increases.
Most of the rising subsidy TOCs have just started a new franchise/management contract.

 

[WatcherZero]

Indeed, the fare changes at Northern were supposed to raise another £30m in revenue, TPE seems to have successfully assimilated the 350's and from experience is enjoying a passenger surge which has lowered its subsidy.

ATW Im not sure about, is it the same as Scotrail and has amortised higher investment in the previous CP leading to lower track access charges/network grant in this one?

As you say, rising network grant apportioned to some of the southern tocs from increased infrastructure investment may explain why their franchise payments to government are increasing yet their operating profit per km to government is also falling rather than rising.

Its only one month which is far too short to be definitive, but Virgin East Coast seems to be sticking to the franchise premium of the previous years East Coast.

 

[Clarence Yard]

The main reasons for these fluctuations in subsidy are changes to NR charges and the Fixed Track Access payment.

2014/5 was the first year of CP5 so every single NR charge is usually altered from 2013/4, the last year of CP4. Franchised TOCs are insulated from this variation by their Franchise Agreement so their payment/subsidy line will be altered as a result.

Fixed Track Access, which is just the residual funding requirement for NR once other NR revenue has been taken into account, also fluctuates year on year (as well as from CP to CP) and as this residual Government funding is "laundered" through the franchised TOCs in a (arguably) arbitrary way, they are also protected from any change and their annual payment/subsidy line will be altered as a result.

The NR website has details of these charges and you can see the CP4/CP5changes for yourself. FTAC is the biggie.

 

[LNW-GW Joint]

ATW Im not sure about, is it the same as Scotrail and has amortised higher investment in the previous CP leading to lower track access charges/network grant in this one?

I don't think ATW is the same as Scotrail, because very little capital spend happened in CP4 and it was under DfT rather than WG (eg Cardiff resignalling).
Maybe the NR split of Wales Route out of Western made a difference.

 

[pemma]

Indeed, the fare changes at Northern were supposed to raise another £30m in revenue, TPE seems to have successfully assimilated the 350's and from experience is enjoying a passenger surge which has lowered its subsidy.

The PTE peak time restrictions will have also benefited TPE's finances.