'Amazing' rolling-stock payouts under attack from GNER boss

Click to follow
The Independent Online

Chris Garnett, the chief executive of inter-city train operator GNER, has delivered a sharp attack on Britain's rolling-stock companies, accusing them of making excess profits.

Chris Garnett, the chief executive of inter-city train operator GNER, has delivered a sharp attack on Britain's rolling-stock companies, accusing them of making excess profits.

Train operators lease their locomotives and carriages from three companies: HSBC Rail; Porterbrook, which is owned by Abbey National, and Angel Trains, owned by Royal Bank of Scotland.

But Mr Garnett said he found it "amazing" that as the trains got older and less reliable, the sum the operators paid to use them remained fixed.

"In any other industry, as an asset gets older, the people leasing it would pay less. But in the railway industry we pay very competitive prices for the rolling stock. It is amazing that on the third, fourth and fifth time [the contracts are renewed] we pay exactly the same," said Mr Garnett.

Industry sources revealed that GNER was considering making an official complaint to the Office of Rail Regulation.

The three rolling-stock companies made profits of around £170m last year. It is reported that they command margins of up to 30 per cent. This has caught the eye of the Transport Secretary, Alistair Darling, who in August called in the bosses of the three companies to discuss the matter.

An executive of one rolling-stock company, who asked not to be named, dismissed the criticisms. He said that the rolling-stock industry was suffering from an excess of trains and the companies had recently spent £100m introducing new safety systems. Lease costs were fixed to cover investment peaks and troughs in the expected 30-year life of a train, he explained.

GNER submitted its bid to keep the East Coast Mainline franchise on Tuesday. Mr Garnett said he had found significant ways to cut the cost of running the London to Edinburgh route, which would allow GNER to increase the £19m premium it pays the Treasury to operate the franchise.

A rival train company confirmed that if it won the franchise it would also "substantially" increase the payment to the Government.

Comments