East coast line on track to deliver taxpayer £1bn

Network's profits of £209m spark criticism over government's plan to privatise route

A fresh row erupted over the Government's privatisation plans for the sole state-run railway line after it emerged the nationalised company operating the East Coast main line handed £208.7m back to the taxpayer last year.

Directly Operated Railways (DOR), the company set up by the Department for Transport to run the London to Scotland line, is now expected to hand back some £1bn to the state over the five years it will run the service.

Between 2009 and 2012, DOR's management of the East Coast operation saw more returned to the taxpayer in real terms than any other previous franchisee. But the Government is still pressing ahead to reprivatise the East Coast line.

Over the past year, DOR's chairman, Doug Sutherland, said East Coast recorded improved levels of customer satisfaction and punctuality, as well as posting a profit and continuing to invest. Turnover for the year to April rose 4.2 per cent to £693.8m. Ticket sales, catering and parking fees ticked up, generating that £208.7m profit, according to DOR, which took over the East Coast line four years ago, when National Express controversially handed it back to the Government.

But ministers remain keen on re-tendering the only state-owned railway in the UK, with a new franchise expected to start in February 2015. Eurostar last month said it would bid to run the railway, in a joint bid with French company Keolis.

Unions, however, claim the East Coast is best in public hands, with figures showing its taxpayer subsidy is starkly lower than other lines; Virgin Rail, for example, last year received seven times the subsidy awarded to the East Coast Mainline.

Bob Crow, the general secretary of the RMT union, said the figures "destroy from top to bottom this Government's case for handing the East Coast back to the rip-off merchants from the private sector.

"DOR are paying even more money back to the Treasury, in contrast to the fat profits extracted from the privatised routes, and yet the politicians are prepared to completely ignore that."

Caroline Lucas, Green Party MP, also criticised the Government's privatisation plans. She said: "Whereas other train companies are making profits that go to shareholders – often publicly owned rail companies overseas – East Coast is delivering millions back to the taxpayer. Given that privatisation has been such a disaster, the question isn't just, 'Why is the Government determined to reprivatise East Coast?' It's, 'Why can't we bring the whole rail network back into public hands?'"

Mr Sutherland said the East Coast's business plan will run for the remainder of the franchise, until the first two months of 2015 "with the twin aims of ensuring a successful transfer of the business back to the private sector – in good condition, and maximising the value of the franchise achieved by the Government and the taxpayer".

DOR's accounts show the East Coast carried 19.05 million passengers in the year and had the highest average loads on its trains of any British operator.

Franchise success

19.05m Number of passengers on the East Coast main line in the year to April, up 1 per cent on the previous 12 months

£224,800 The annual salary for chief executive, Michael Holden (up from £156,000 a year ago)

Source: DOR accounts