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.

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."

Recommended

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework
Investment strategy

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework

John Stepek talks to Steve Clapham, investor, analyst and author of The Smart Money Method, about the dangers in picking individual stocks and why you…
8 Apr 2021
BP looks set to return more money to shareholders as it beats expectations
Energy stocks

BP looks set to return more money to shareholders as it beats expectations

Oil major BP is to embark on a share buyback programme after significantly reducing its debts. Saloni Sardana looks at what it means for your portfoli…
6 Apr 2021
Deliveroo has hit the market – but it’s not getting the warmest welcome
UK stockmarkets

Deliveroo has hit the market – but it’s not getting the warmest welcome

Food delivery company Deliveroo made its debut on the stockmarket this morning. But with the share price sliding by 30% straight away, it’s not made t…
31 Mar 2021
Three stocks to buy now that will come back stronger after Covid-19
Share tips

Three stocks to buy now that will come back stronger after Covid-19

Professional investor Ed Wielechowski of Odyssean Capital, chooses three compelling stocks that should thrive in a post-pandemic world.
29 Mar 2021

Most Popular

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?
Bitcoin

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?

As bitcoin continues to soar in value, many of the world’s central banks are looking to emulate it by issuing their own digital currencies. But centra…
8 Apr 2021
Nuclear power might never be popular – but now looks a good time to invest
Commodities

Nuclear power might never be popular – but now looks a good time to invest

Nuclear power gets a very bad press, but it is the ultimate renewable energy source. Interest in it is perking up again, says John Stepek. Which means…
9 Apr 2021
How to find companies that can thrive in the post-Covid world
Advertisement Feature

How to find companies that can thrive in the post-Covid world

Many sectors of the global economy will return to something resembling pre-pandemic status, but others will take far longer to recover.
8 Apr 2021