Network Rail debt costs 1.5bn pounds every year

More than 10 per cent of the money being spent on UK railways is actually used to service Network Rail's huge debts, it has emerged.

According to a report from the Office of Rail Regulation (ORR), the cost of paying off the £28bn debt totalled £1.5bn in the 2011-12 financial year, equal to 13% of the amount used to operate the network of lines across Britain.

Network Rail's Finance Director, Patrick Butcher, has previously estimated that the organisation's debt is likely to rise over the coming 20-30 years.

ORR Chief Executive, Richard Price, said: "Governments have recently committed billions of pounds to improving Britain's railways in the coming years because of the benefits it will bring to our economy and society. Taxpayers and rail customers have every right to know exactly where their money goes and what it delivers.

"This data is valuable as we scrutinise the proposed £37.5bn plan for the railways between 2014-19 to ensure it is affordable, that every penny is made to count and that all those involved in delivering the plan work together to achieve high levels of safety, performance and value for Britain."

The £11.6bn cost of running the network was 58% funded by money generated generated from passengers, with the other £4.0bn coming from government subsidiaries.

According to the ORR, the contribution to running costs from passenger income rose 8.7%, partly due to a rise in journey numbers, while the government's funding decreased by £19m (0.5%) compared to the 2010-11 year.

Anthony Smith, the Chief Executive of industry watchdog Passenger Focus, said: "For too long passengers have been the passive recipients of major decisions made on their behalf behind closed doors. These figures confirm what passengers have known for some time - the shift towards the railways being funded more by passengers and less by taxpayers has already gone a long way.

"Passengers are now putting in almost two pounds for every pound the taxpayer puts into the railway - so we say the voice of the user and main funder of the railways should be radically boosted, in a process that needs to be opened up to scrutiny."