Train firms' 20% profits rise sparks fury

PROFITS at Britain's private train companies soared 20% in 12 months to reach a record high last year. The eight train operators generated total profits of about £288m, a new analysis of their figures reveals.

The bumper results have sparked fresh accusations of profiteering. The companies receive huge Government subsidies.

There is also outrage such profits are being earned while passengers put up with fare rises well above inflation and one in five trains runs late.

Tim Nicholson, chairman of the Rail Passengers' Council for Southern England, said: 'Clearly these profits are too great. An appropriate mechanism needs to be found to ensure they find their way back as investment on the railway.'

Gerry Doherty, general secretary of TSSA, the white-collar rail union, said: 'This is symptomatic of the industry's structure, with tax subsidy going straight into private profit. Why aren't harder bargains being driven by the people writing these franchise agreements?'

Details of the profits come almost exactly nine years after the first privatised train service pulled out of Twickenham following the break-up of British Rail. FirstGroup, which runs Great Western high-speed services out of Paddington made the biggest profit: £60million, up 20%.

It is followed by National Express, operator of routes out of Liverpool Street and the Gatwick and Stansted Express services. City forecasts suggest its rail profits rocketed by about 70% to £54m. Last year it received net Government subsidies of £637m.

Thameslink and Southern operator Go-Ahead saw its surplus shoot up 63% to £41m. The Bedford-Blackfriars-Brighton Thameslink is so lucrative the firm had to refund £41m to the Treasury.

King's Cross Mainline services boosted GNER, which was £30m in the black even after handing £22m back to the taxpayer. South West Trains operator Stagecoach is expected to make £43m from the railways despite a contract which makes it pay back excess profits.

Stagecoach was awarded £116m of tax subsidies for running the franchise last year. Virgin Trains, whose West Coast Mainline and Cross Country services gobbled up £578m of taxpayers' funds, made £18m.

Swelling profits are also paying handsome dividends for the firms' City backers. Shareholders in Go-Ahead received a 58% increase in dividend payouts last year, while Stagecoach is planning to raise dividends by 20%. National Express and FirstGroup shareholders are expecting inflation-beating rises of 10%.

Unions condemned the alleged profiteering, especially after the decision to return the Kent franchise to the private sector. They say South Eastern Trains should remain in public hands, 15 months after the Strategic Rail Authority sacked Connex South East and put in its own managers.

But the gravy train may be coming to a halt. Christian Cowley, analyst at broker ABN Amro, said: 'We expect profits to be squeezed as some highly profitable franchises are re-tendered at lower margins in future