Chiltern, London Midland and East Coast among quarter of rail franchises making losses between £1m and £8m

The findings back up industry claims that the franchise system does not lead to excessive profits

A quarter of franchised train operators are losing money, according to figures buried deep in a report released by the Office of Rail Regulation today.

Chiltern, East Coast, Abellio Greater London, South-eastern and London Midland were making losses of between £1m and £8m, while the remaining 14 operators were in the black. Northern Rail, which calls at more than 500 stations in the North of England, had the biggest profit at £29m, and the 19 franchises together made £178m.

The findings back up industry claims that the franchise system does not lead to excessive profits. A recent KPMG report for the Rail Delivery Group, which represents the train operating companies, showed average train operator margins are 2.9 per cent, 20 per cent lower than in the 1990s.

A spokesman for the Rail Delivery Group said that the industry is “focused on improving services and attracting even more passengers and freight to travel by train while reducing taxpayers’ overall contribution”.

The findings are contained within a 57-page annual report that collates the rail industry’s financial information. The regulator found that the industry’s income in 2013-14 was £13.3bn, with Britain’s railways increasingly becoming less reliant on the taxpayer.

Government funding was £3.8bn, the bulk of which came from the Department for Transport. This was a decrease of 8.1 per cent on the previous year and a 28.3 per cent fall in public sector spending per passenger journey since 2010. Money raised from passengers, in the forms of ticket fares, on-board catering and car parking, was £9bn, up 3.5 per cent.

The decrease in government money is largely attributable to a recent surge in people using trains.

Industry expenditure was £12.7bn, nearly a fifth of which went on staff costs. More than £6bn of spending went to Network Rail, the state-backed body that runs and maintains the track infrastructure.

The analysis also shows that commuters in Scotland and Wales enjoy far greater rail subsidies than English passengers, who receive about £1.88 from the taxpayer per journey. A Scottish ticket includes funding of £7.77 and Wales £9.18.

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