Network Rail's debt ratchets up running costs

The burden of Network Rail's £28bn debt pile means that 13 per cent of the cost of running the railways is taken up in loan repayments, according to the industry regulator.

Directors at Network Rail, the state-backed but commercially run body responsible for Britain's track and major stations, have been working on ways of taking advantage of record low interest rates to get a grip on its spiralling debts.

An Office of Rail Regulation Report showed just why such negotiations are imperative, as it showed that in 2011-12 £1.5bn of Network Rail's £11.9bn expenditure went on funding debt. That expenditure was 2.9 per cent up on the previous year.

Critics of privatisation seized on figures that showed the nationalised East Coast Main Line took a lower subsidy and provided a greater return than any of the other 18 franchises.

The shadow Transport Secretary, Maria Eagle, said: "The rail regulator exposes the truth behind private train companies' claims about their financial contribution to the industry.

"These companies are paying less to the Government than they are receiving in subsidies, even excluding the £3.9bn spent on infrastructure through Network Rail."

However, it was also found that passengers are "increasingly covering the costs of the railways relative to taxpayers". Income from fares last year was £7.2bn, nearly 60 per cent of the industry's combined income and subsidy.

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