ATW Subsidy/Premium - Can anyone explain?

[Rhydgaled]

Today's Railways UK (Dec 2012 issue) has a table of TOC payments for 2011/12 on page 9. For Arriva Trains Wales it gives the following information:

• Total Revenue - £153.5m
• Total Support - (£21.3m)
• Revenue Support / (Share) - None
• Franchise Subsidy / (Premium) - (£21.3m)

Note the brackets around the figure of £21.3m. I take this to mean that ATW paid a premium to the DfT of £21.3m, but don't they recieve a subisdy of more than that from the Welsh Government? If so, doesn't that mean that, effectively, £21.3m of the WAG subisy to ATW actually just goes into the Westminster Department For Transport?

 

[Gareth Marston]

Today's Railways UK (Dec 2012 issue) has a table of TOC payments for 2011/12 on page 9. For Arriva Trains Wales it gives the following information:

• Total Revenue - £153.5m
• Total Support - (£21.3m)
• Revenue Support / (Share) - None
• Franchise Subsidy / (Premium) - (£21.3m)

Note the brackets around the figure of £21.3m. I take this to mean that ATW paid a premium to the DfT of £21.3m, but don't they recieve a subisdy of more than that from the Welsh Government? If so, doesn't that mean that, effectively, £21.3m of the WAG subisy to ATW actually just goes into the Westminster Department For Transport?

WG website says its gives "around £170 million per annum" to Wales and Border franchise.

 

[Bald Rick]

A similar table is on pp27 of the latest Modern Railways; it is the result of a question asked in Parliament.

ATW paid a premium of £23.1m in the financial year 2011/12. Note this does not mean the railway is 'profitable'.

What isn't shown is the value of the Network grant paid direct to Network Rail that relates to infrastructure provision for Wales. But I would guess this will be a relatively big number - the Network grant for the similarly sized LM is £137.2m

 

[Greenback]

Welcome to the wonderful world of financing the railway system in Great Britain...

 

[LNW-GW Joint]

I have just found this interesting report on the ORR web site into TOC revenues and costs:
http://www.rail-reg.gov.uk/upload/pdf/toc-benchmarking-report-2012.pdf

Sorry, don't know how to quote selective bits, but if you find Figure 31 on page 47 (section 3.18), it shows the net premium/subsidy for all the TOCs.
£177m for ATW looks about right. There are three TOCs with a bigger subsidy (SE, SR, NT).

ATW makes a "profit" based on a revenue/cost profile contracted at the start of the franchise, and can increase this profit if it beats the profile.
I don't know where the £23.1m rebate to DfT/WG comes from, as it doesn't seem to be a profit share.

The subsidy was originally determined by the DfT (with WG input on service spec) and then transferred to WG management in 2007.
It is still essentially DfT money, and there is only one pot, managed by WG.
WG can add a bit of its own money for specific local projects, and there's always Gerald to add into the mix (but this is not a franchise commitment).

The bulk of the ORR report is about TOC revenues and costs, but most of it is grossed up for the whole GB railway rather than broken down by TOC.
Somewhere there is a table of "Subsidy per passenger mile" for each TOC on the DfT web site but since the site has been marmalised recently I can't find it!

The subsidy figure doesn't include the Network Grant, but beware about lists which break this overall grant number down between TOCs. I don't believe there is a meaningful split.
The ORR itself splits it by, I think, TOC revenue, which is a reasonable approximation. But you could get a situation where a high-income TOC gets a relatively low NR spend, and vice versa.
My guess is that ATW gets a relatively low share of the Network Grant (because NR is not very active in Wales, compared to, say, London).

 

[Rhydgaled]

ATW paid a premium of £23.1m in the financial year 2011/12.

That is what I understood the table to mean, thanks for confirming.

WG website says its gives "around £170 million per annum" to Wales and Border franchise.

And that is what I believed was the case before I saw the table, thanks for confirming that also, although the figure I had in my head was either £140m or just £40m but now that you remind me about £170m rings a bell.

So WAG pays £170m subsidy to ATW, of which ATW then pays £23.1m back to WAG/DfT by ATW. Why don't they just subtract the £23.1m 'premium' from the subsidy payment and not require a premium at all? Greenback's (presumably sarcastic) comment says it all really.

 

[Gareth Marston]

That is what I understood the table to mean, thanks for confirming. And that is what I believed was the case before I saw the table, thanks for confirming that also, although the figure I had in my head was either £140m or just £40m but now that you remind me about £170m rings a bell.

So WAG pays £170m subsidy to ATW, of which ATW then pays £23.1m back to WAG/DfT by ATW. Why don't they just subtract the £23.1m 'premium' from the subsidy payment and not require a premium at all? Greenback's (presumably sarcastic) comment says it all really.

WG money comes form a bloc grant from London of around £15 billion. and of course Arriva make about £10 million in profit which goes to ... German state rail Dutcshe Bhan. The wacky world of rail finance.

 

[Greenback]

WG money comes form a bloc grant from London of around £15 billion. and of course Arriva make about £10 million in profit which goes to ... German state rail Dutcshe Bhan. The wacky world of rail finance.

In a similar tone to my earlier comment (yes Rhydgaled, it was sarcastic!), I am so pleased that a small part of my fare to get to and from work goes to the German government