TOC Payments in 2024-25

[Nicholas Lewis]

Hidden amongst the DfTs 2024-25 annual report and accounts of 386 pages in note 27 is the payments made to TOC across this financial year.

27. Entities controlled but not consolidated: Train Operating Companies for which no investment is recognised in the Statement of Financial Position

Within these financial statements, the costs of subsidising passenger rail services have been recognised as expenditure, following the accounting policy disclosed in Note 1.22.

I've translated these into the table below.



The report provides no interpretation of the data and its difficult to reconcile some of the operator changes. Most have shown a modest reduction in "subsidy" as to be expected as ridership has recovered with Greater Anglia and Avanti West Coast showing considerable increase in payments to DfT. LNER appears to have lost its status post the covid rebound but GWR is the biggest outlier on subsidy increase. Perhaps when the operating companies release their formal annual report to companies house we get a better insight.

 

[Class 170101]

Not really sure what the data shows but can it be understood that XC have reduced their subsidy requirement by between a third and a half?

 

[YorkshireBear]

Hidden amongst the DfTs 2024-25 annual report and accounts of 386 pages in note 27 is the payments made to TOC across this financial year.





I've translated these into the table below.

View attachment 184975

The report provides no interpretation of the data and its difficult to reconcile some of the operator changes. Most have shown a modest reduction in "subsidy" as to be expected as ridership has recovered with Greater Anglia and Avanti West Coast showing considerable increase in payments to DfT. LNER appears to have lost its status post the covid rebound but GWR is the biggest outlier on subsidy increase. Perhaps when the operating companies release their formal annual report to companies house we get a better insight.

I wonder what is driving the LNER increase. That seems odd considering their post COVID success and lack of any major issues (such as staffing) affecting them. GA phenomenal, be interesting to see what nationalisation does to that.

 

[Moonshot]

Pretty much £2 million per day to subsidise Northern

 

[Merseysider]

I wonder what is driving the LNER increase.

Could their constant screwing around with fares be putting customers off?

 

[Nicholas Lewis]

Not really sure what the data shows but can it be understood that XC have reduced their subsidy requirement by between a third and a half?

Correct.

I've tweaked the table to make things more obvious.

 

[DarloRich]

Could their constant screwing around with fares be putting customers off?

No, it shows northern fares are far to cheap to cover the costs if running a service!

 

[zwk500]

It's worth noting that the actual headings are 'Departmental expenditure on ERMA/NRC' and the note quoted about subsidy recognised as expenditure indicates that this includes *All* DfT spending on a franchise, including capex/RDL for enhancements, as well as the day-to-day operating subsidy.

Without further figures being broken down (e.g. By the ORR) it's not possible to say for sure exactly what is and isn't included in that headline number.

 

[London Trains]

No, it shows northern fares are far to cheap to cover the costs if running a service!

If fares increased, people would be driven away from the railway and the amount of subsidy needed would end up increasing.

What needs to happen across the country is for improvements to be made and fares decreased to attract more people onto the railways - in the very short term more subsidy would be needed to make the improvements, but in the long term you would end up needing much less subsidy than now.

 

[Moonshot]

If fares increased, people would be driven away from the railway and the amount of subsidy needed would end up increasing.

What needs to happen across the country is for improvements to be made and fares decreased to attract more people onto the railways - in the very short term more subsidy would be needed to make the improvements, but in the long term you would end up needing much less subsidy than now.

Absolute garbage......fares have increased every year .....and up to the point of COVID happening, passenger numbers were also increasing. Pax numbers are on the rebound since COVID.... though that's not uniform across the board.

 

[London Trains]

Absolute garbage......fares have increased every year .....and up to the point of COVID happening, passenger numbers were also increasing. Pax numbers are on the rebound since COVID.... though that's not uniform across the board.

I'm talking about significant fare increases as was being suggested by saying fares are too cheap, not the standard yearly fare increases that are sort of in line with inflation. And my point was saying that the only way to get significant increases on pre-Covid passenger numbers is to make improvements to the railways (the Elizabeth Line being a case in point), especially given we should be trying to get people out of their cars and onto sustainable modes of transport.

No need to be rude either way.

 

[43066]

If fares increased, people would be driven away from the railway and the amount of subsidy needed would end up increasing.

What needs to happen across the country is for improvements to be made and fares decreased to attract more people onto the railways - in the very short term more subsidy would be needed to make the improvements, but in the long term you would end up needing much less subsidy than now.

I’m just not sure this analysis is correct. Yes there would be a point where fare increases would reduce passenger numbers, but it’s not clear that we are anywhere near that now. Clearly some people are priced off, and will drive or use other transport methods, but others who are willing and able to pay will take their place. We have seen this on the WCML and ECML where capacity has risen and passenger numbers have hugely increased despite fares increasing. This shouldn’t be any surprise as the railway has always been used by the more affluent.

Fares have generally increased based on the higher RPI measure rather than CPI for many years now, passenger numbers have also risen, but subsidy hasn’t reduced. So it’s pretty clear in the current climate that the DfT aren’t going to want to take any action that further increases subsidy, even in the short term, and the temptation will be to increase fares further. Indeed this year fares have risen above RPI for only the second time since 2013.

Improvements like the Elizabeth Line are excellent, but take many, many years to come to fruition and have a nasty habit of going over budget.

 

[swt_passenger]

Are a few of the percentages in the table quite wrong?

Eg XC should be -39%, LNER 264%, GA 85%, AWC 480% - but I haven’t checked them all.

Also, are there no figures for SWR?

 

[styles]

Pretty minor but would %increase rather than %change make a bit more sense?

GA/AWC have clearly dropped massively but their %change appears positive.

 

[ScotGG]

SE due to very high track access charges from HS1? A noose around the rest of the network. Hopefully now track access fees are reducing that will go down. SE has such potential within London and growth areas in Kent away from HS1 but can't embrace them due to HS1 being a money sink. If HS1 was independent it'd be a different story.

 

[The exile]

So an overall increase of about £6 million?

 

[godfreycomplex]

SE due to very high track access charges from HS1? A noose around the rest of the network. Hopefully now track access fees are reducing that will go down. SE has such potential within London and growth areas in Kent away from HS1 but can't embrace them due to HS1 being a money sink. If HS1 was independent it'd be a different story.

There is a bit of that but let's not forget SE actually bears closer resemblance to Northern/TfW throughout most of its (quite rural) network - just with much longer trains

 

[JamesT]

Are a few of the percentages in the table quite wrong?

Eg XC should be -39%, LNER 264%, GA 85%, AWC 480% - but I haven’t checked them all.

Also, are there no figures for SWR?

It looks like the original poster has divided the wrong way round, e.g. XC's 2023/24 figure of £79m is 165% of 2024/25's £48m. But the change is going the other way where 2024/25 is 61% of the previous year, which is a 39% decrease as you note.
The original document has the figures on pages 336 and 337. SWR went from £162m subsidy to £121m.

 

[The exile]

It looks like the original poster has divided the wrong way round, e.g. XC's 2023/24 figure of £79m is 165% of 2024/25's £48m. But the change is going the other way where 2024/25 is 61% of the previous year, which is a 39% decrease as you note.
The original document has the figures on pages 336 and 337. SWR went from £162m subsidy to £121m.

It’s strange - some of the % figures are correct; others wildly out.

 

[Clarence Yard]

The 2023/4 figures seem to be at variance with the figures supplied to the ORR for their table 7226. The 2024/5 figures have yet to appear on table 7226.

When doing any year on year comparison, the key thing to remember what Fixed Track Access does between those years on a TOC by TOC basis. That is made worse by 2023/4 being the last year of CP6 and 2024/5 being the first year of CP7 so there will be significant differences in the subsidy/premium line for this item alone.

As FTA is effectively another form of Network Grant, normalising the subsidy/premium line to exclude FTA gives you a better comparison when it comes to analysing table 7226 figures.

 

[Class 170101]

Did any operators actually make money / hand money back to the DfT once NR costs are included?

 

[Clarence Yard]

No.

 

[dk1]

Does it really matter? Trains will still run whatever.

 

[DarloRich]

I'm talking about significant fare increases as was being suggested by saying fares are too cheap, not the standard yearly fare increases that are sort of in line with inflation

Fenny Stratford > Milton Keynes return 0800/1700: £9.30 (4 miles 10 chain)

Woodlesford > Leeds return 0800/1700: £5.30 (5miles 76 chain)

It is even the same train type for some of the journey!

 

[setdown]

Does it really matter? Trains will still run whatever.

Trains will still run, but the healthier the finances, the better things can be. SWR are still running their Class 444s... but in my experience they're often running around with the aircon systems blowing hot air, window glazing blown, graffiti down the side, and even starting to sit down for a few minutes at stations here and there due to faults.

Healthier financial performance might well help with budget for those things "around the edges".

 

[43066]

SE due to very high track access charges from HS1? A noose around the rest of the network. Hopefully now track access fees are reducing that will go down. SE has such potential within London and growth areas in Kent away from HS1 but can't embrace them due to HS1 being a money sink. If HS1 was independent it'd be a different story.

I’m not sure any of this follows? SE’s HS1 services are well patronised, and the limitation there is stock rather than willingness to operate on HS1. In terms of the classic network, what potential is SE missing out on (metro is almost back up to pre Covid levels of service) and how do you know that’s due to HS1 track access charges?

It’s all largely wooden money anyway as access to HS1, including track access charges, is regulated by the ORR.

 

[Goldfish62]

Does it really matter? Trains will still run whatever.

I assume that's tongue in cheek, otherwise it's an incredibly naive statement.

 

[43066]

I assume that's tongue in cheek, otherwise it's an incredibly naive statement.

In fairness @dk1 is drawing from decades of experience, including working under BR, privatisation, Covid and now re nationalisation to make that statement.

I think it’s 100% accurate!

 

[dk1]

I assume that's tongue in cheek, otherwise it's an incredibly naive statement.

No, not at all. Been employed on and interested in rail for over 40 years. Been so many ups & downs and yet they always carry on. Cant see that changing personally.

 

[Krokodil]

I’m just not sure this analysis is correct. Yes there would be a point where fare increases would reduce passenger numbers, but it’s not clear that we are anywhere near that now. Clearly some people are priced off, and will drive or use other transport methods, but others who are willing and able to pay will take their place. We have seen this on the WCML and ECML where capacity has risen and passenger numbers have hugely increased despite fares increasing. This shouldn’t be any surprise as the railway has always been used by the more affluent.

There's evidence that some fares are priced beyond "maximum yield". Avanti's morning peak trains into Euston are often pretty quiet, only filling up at Milton Keynes if they stop there. Cutting the Anytime fares may prove profitable. Manchester's for example is horrendously overpriced.