Rail boss claims £200m payout to shareholders is ‘small profits’ that gives customers ‘best possible value’

Paul Plummer’s comments coincide with a new report that suggests rail prices have increased at twice the speed of wages

Passengers disembark a train at King's Cross station on November 7, 2014 in London, England (Getty)

A rail boss today claimed £200m pocketed every year by train company shareholders is “small profits” necessary to guarantee improving services.

The chief executive of the Association of Train Operating Companies (ATOC) said the payouts help enable “the best possible value for the nation”.

The comments risk angering frustrated passengers who face a rail fares hike of 1.9 per cent and come as a new report claimed prices have increased at twice the speed of wages.

ATOC represents all rail firms including Southern, whose exasperated passengers have faced huge delays and hundreds of cancelled services.

Quizzed over dividends paid to shareholders, chief executive Paul Plummer said: “Those margins are around £200m, around 3p in every pound.

“[It is] a very small margin which enables competition between operators.

“It allows you to have different operators, on different routes, bidding for the right to run a franchise which is specified by the government to deliver the best possible value for the nation.”

Speaking to the BBC, he added: “There’s a trade-off clearly, and a judgement has to be made about whether those small profits are sufficient to pay for the innovation and improvements you get over time to enable us to deliver this upgrade programme.”

Challenged over some poor services, Mr Plummer said “everyone in the railway is sorry” when standards fall short but nobody should doubt firms’ commitment to improving services.

Regulated rail fares, including season tickets and off-peak inter-city tickets, will rise by 1.9 per cent in line with July’s Retail Prices Index inflation figure, published today.

Research by the Trade Union Congress (TUC) and the Action for Rail union campaign showed that fares have risen by 25 per cent in the last six years, while average weekly earnings have grown by 12 per cent.

The TUC said dividends to rail company shareholders had risen by 21 per cent in the last year, though this was denied by ATOC.