Ross Clark Ross Clark

It’s time we stopped subsidising the railways

Credit: Getty images

Rail travel has never been cheap, but should we really each be paying £500 a year even if we never set foot on a train? That, according to figures released by the Office of Rail and Road today, is astonishing sum that each household had to contribute to government subsidies for running the railways in the year to March 2022: a total of £13.3 billion.

That is just the subsidy for running existing services; it doesn’t include the billions being spent on HS2. Not that this largesse has, of course, prevented rail workers from demanding above-inflation pay rises, and striking when they are denied them. If they were working in any other hopelessly unprofitable industry they would long since have been put out of a job.

It is time the government stopped sitting on the fence and told the rail industry that the party is over

Surely, one of the main reasons for privatising the railways was to relieve taxpayers of the financial burden of running them. Instead, the subsidies have grown and grown. True, the year 2021-22 began with the tail end of a Covid lockdown which severely suppressed travel, but other private industries had to put up with loans and furlough payments – employees didn’t carry on being paid the full whack whether they were providing a service or not. Moreover, the rail industry was swallowing large subsidies even before the pandemic: £6.5 billion in 2019/20.

The rail industry hasn’t really been privatised at all. It remains underwritten by the taxpayer. Nor is there much in the way of competition: local monopolies are guaranteed by the franchising system.   The only difference is that the system is rigged so as to allow the private companies owning the franchises to make a profit, even if their underlying operation is making a thumping loss.

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