Public cost of running nation's trains soars to record £483m

New figures show that beleaguered rail operator Abellio ScotRail received the cash while also posting record losses of £11m, it has been revealed.

Financial performance details showThe Dutch-owned firm enjoyed an increase in its subsidy of nearly £200m in a year, mostly to cover a rise in the charge imposed by Network Rail to use the track system of more than £150m.

The details emerged less than a fortnight after it was announced it had been stripped of the franchise three years early in the wake of continuing outcry over service failings.

The decision sparked calls for the network to be taken into public ownership but the latest figures show how much it would cost taxpayers to run the railway due to the way the contract is drawn up.

Transport Secretary Michael Matheson told MSPs his officials considered continuing the franchise to its full term but it would not deliver value for money. And he said there was no justification for a further rise in the subsidy, requested by Abellio.

The £11m pre-tax loss, covering a 15-month period to March 31, 2019, compares to a restated £4m deficit for the year to December, 2017.

Subsidies from Transport Scotland soared by 63% from £296.6m in 2017 to £482.8m while passenger income boosted by fare rises rose by nearly £100m to £445.3m.

The latest subsidy covering a year and three months eclipses what Abellio ScotRail received in its first two years.

The company said that the increase in subsidy included “additional contractual contributions” which resulted in a doubling of access charges imposed by the rail infrastructure managers Network Rail as decided by the regulator, the Office of Rail and Road. They rose from £144.15m to £291.06m.

An Office of Road and Rail report detailed a record £307m payment for the financial year 2017/18 – a rise of 22%.

At the time, ScotRail said the increase in franchise payments was built into the original contract because of Network Rail “fixed track access charges” which increase over time.

In November, last year, it emerged that ScotRail had been paid £23m early to cover revenue shortfalls and amid growing concerns over performance.

The payments were made throughout 2017 and 2018 as pre-tax losses rose.

It came after Abellio did not achieve an increase in ticket sales because of delays and disruption caused by upgrading of the main Edinburgh-Glasgow line.

When asked yesterday, the Scottish Government said the main difference relates mainly to track access charges that went to Network Rail. Track access charges were said to have increased, among other reasons, because there are more services than ever before.

A Transport Scotland spokesman said: “It has been stated several times previously these payments include the various increases for fixed track access charges which, in turn, are paid direct to Network Rail. This is something we have been open and transparent about.

“Our commitment to financing improvements for passengers with a raft of new services, trains and improvements has been shown time and again. Ministers continue to hold Abellio to account within the terms of the franchise agreement.”

Financial statements also reveal there are £40m in loans owed to sister companies of Abellio and the parent company in the Netherlands, Dutch Railways – NV Nederlandse Spoorwegen – a rise of nearly £15m on the previous year.

The Scottish operation owes Nederlandse Spoorwegen, the principal passenger railway operator in the Netherlands, some £21m from loans, up from £10m the previous year.

Most of the loans will be payable at the end of the franchise in March, 2022, and are being charged at up to 8% annual interest while the cost of renting rolling stock soared from £78.86m to £127.79m.

In December, last year, a new timetable with the introduction of high-speed trains and new class 385 electric trains ushered in months of cancellations and disruption to services with much of it put down to staff shortages partly due to training to deal with the new trains and timetable.

ScotRail was forced to submit a plan by February 19 to address falling performance levels which, if unsuccessful, could result in a breach of contract and lead to Abellio losing the franchise early.

In a report, the Abellio ScotRail board said: “During this unprecedented investment and change, results for the period have been impacted by operational performance issues following major infrastructure upgrades of track and stations and the late delivery of new trains to support significant timetable improvements.

“A performance improvement remedial plan was agreed with Transport Scotland in February 2019 that included additional investment of £18m in the company’s operations and we have seen a significant improvement in performance with all targets set in the plan delivered to date.”

It acknowledged that customer satisfaction measured in the National Rail Passenger survey was at 84% last spring and 79% in the autumn “reflecting the disruption to operational performance”. But it said it was “pleased to note” an improvement to 85% in the spring.

On January, 2016, Abellio announced profits of £9.5m in the first nine months of the franchise which led critics to accuse it of profiteering, but the following year it reported a £3.5m loss in its first full year of operation.

Abellio took over from FirstGroup after the Aberdeen-based company had run most Scottish rail services for some 10 years. The 10-year deal was worth up to £6 billion.

The decision triggered a political row, with unions and Labour condemning the award to an overseas company rather than the Scottish-based firm.

Network Rail were approached for comment.