How is spending for rail infrastructure funded?

[pethadine82]

I think its great that we have new rolling stock and electrification are gaining traction (pun intended)
How is this all funded, I am sure it doesn't all come from the tax payers.
Can the Bank of England issue bonds using quantitative easing or other modern monetary theory?
Would love to hear from the group.
Thank you.

 

[Tio Terry]

Major Investment Projects (not just Rail related) are financed by the issue of Bonds just so long as the Business Case meets Treasury requirements.

Other investment has to come from revenue, the taxpayer and borrowing. Revenue would include things like sale of non-operational land and similar income.

 

[DarloRich]

paging @Bald Rick

My knowledge doesn't extend further than what @Tio Terry sets out above other than to add that it is possible that money could come from a third party like a developer paying towards a new station.

NR are being encouraged to find more third party funding.

 

[The Planner]

We spend LOADS on scratchcards and get lucky. Whitemoor yard is where all the grey bits go.

 

[Bald Rick]

We spend LOADS on scratchcards and get lucky. Whitemoor yard is where all the grey bits go.

Brilliant!


This is the simple version. The reality is much more complex because of the way money flows around the industry from ticket office to spades in the ground.

All railway costs are funded by the taxpayer, farepayer, or railway property income. This is the same concept as my house being funded by my salary.

Financing is a very different subject, and is the equivalent of a mortgage.

Most rolling stock, ie that which is leased, is financed by bonds issued by the leasing company direct, or via lending through merchant banks who then issue bonds to back off the loan. All the bonds are issued on the basis of a predicted forward income stream, some of which will be at risk.

Infrastructure projects are (mostly) financed directly by Government, either central or local. Central Government through the usual Treasury debt issuing programme; local government through their own borrowing, whether through the public works loan board or elsewhere.

Network Rail used to issue its own debt, but that is all now controlled by Treasury.

 

[pethadine82]

Thanks Bald Rick for clearing that up. So for example if we have the equivalent of Biden and a treasury security such as Jan Yellen, who agree that stimulus is needed, would the railways get a boost as well. It would be fantastic if it did, as we are investing in our future, and I cant think of a far better and greener way to travel then by train.

 

[DarloRich]

We spend LOADS on scratchcards and get lucky. Whitemoor yard is where all the grey bits go.

Did you know there is a special machine there that gathers all of the grey bits together, washes them and then squashes them into a sort of cake that can be used for infill on the roads? you crumble up the cake and fill in the potholes. Genius.