Fined rail firm recoups its losses

Since privatisation, South West Trains has provided an unreliable service. Commuters have been delayed, and hundreds of trains have been cancelled. Despite this, the company has only been fined pounds 100,000, writes Randeep Ramesh

Large performance bonuses have helped Britain's first privatised train company recoup losses on fines it had to pay when it cut services because of a driver shortage.

Official figures released yesterday showed that South West Trains, part of the pounds 1.6bn Stagecoach empire, was paid bonuses of more than pounds 1.7m - which almost covered the pounds 1.82m worth of fines.

The size of the payout is bound to anger passenger groups and rail campaigners. At the height of the disruption in March, more than 100,000 commuters faced nightmare journeys home from London after trains were reduced in length.

The service had become so bad that even Conservative ministers resorted to describing the company, which runs trains from London to Hampshire and Surrey, as "inept". This spurred the franchising director, John O'Brien, to consider revoking its licence.

But under the privatised railways' incentive scheme, train companies can often better the low performance standards set and collect payouts from the taxpayer. Until this spring, SWT had easily met the targets and been paid handsome bonuses.

The pressure group Save Our Railways said the figures showed how rail privatisation was "a rip-off". SOR said the pounds 101,000 amounted to just a tiny slice of the train company's annual subsidy of more than pounds 63m. "It's a graphic illustration of how rail privatisation is not much more than a mechanism for recycling public subsidy as private profit," said Jonathan Bray, SOR campaigns director.

The private rail network has already created problems for politicians. West Yorkshire Passenger Transport Authority, which is run by local councillors, is threatening to withhold bonus payments of pounds 556,000 to Regional Railways North East after the company cancelled 800 trains.