Rail firms make £1.1bn since sell-off

Private rail companies have made more than £1.1 billion profits since British Rail began to be broken up a decade ago.

The scale of the profits - enough to pay for an upgrade of every London commuter route south of the Thames - is revealed in an Evening Standard investigation into the companies that now run the railways. The figure comes on the eve of the 10th anniversary of rail privatisation.

Anthony Smith, national director of the Rail Passenger Council, said: "Nobody has any problem with companies making fair profits for fair performance but some companies are making huge profits and delivering utterly mediocre performance. Dividends for shareholders are all very well but what about the passenger dividend?"

The profits are also being earned while taxpayers are being asked to dig ever deeper into their pockets to support the network.

While total government support for the railways was £1.34 billion a decade ago, ministers have pledged £3.8 billion in subsidies in the current financial year, a rise of more than 180 per cent.

Over the same period inflation has risen just 28 per cent. In total, the privatised industry has received more than £15 billion of government support. It was condemned at the time as "a poll tax on wheels" and has never brought the benefits promised by then Transport Secretary, John MacGregor.

Liberal Democrat transport spokesman John Thurso said of rail privatisation: "It was a flawed model - the amount of profit that came out of the industry to private companies without benefit to travelling passengers means it has failed its customers and failed the nation."

Over the decade since the start of privatisation performance has fallen disastrously, although safety records have improved and more people travel by train.

Between 1993 and 2003:

The £1.1 billion profit figure refers just to the operating profits made by 25 passenger-train franchises. If other former British Rail companies such as the train leasing firms are included, the total profit is likely to be in excess of £2 billion.

Even the £1.1 billion total would have been enough to revitalise services if it had been invested in the network.

Roger Ford, a consultant of Modern Railways magazine, said that it could have paid for a vital improvement to the electrical supply on all commuter lines south of London.

This would allow hundreds of faster Electrostar and Desiro trains currently parked in sidings to run on some of the most unreliable routes in the country.

George Muir, director general of the Association of Train Operating Companies, insists the profits made since privatisation represented only a small return for companies that took the risk of taking on rail operations from the Government.

He said: "Those profits represent about three per cent of turnover, rather less than the average return for British industry as a whole.

"We've got one of the fastestgrowing rail industries in Europe and train companies have backed £4 billion worth of new rolling stock. We have also invested millions in new safety systems and new staff - overall, train-operating companies have been a great success."

The most profitable single passenger franchise was the first to be privatised, the South West Trains commuter network run by the Stagecoach transport group.

It has earned more than £200 million in operating profits since the first privatised service trundled out of Twickenham station in February 1996 and was recently cited by the company as the reason for the doubling in the company's share price this year.