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Are private Train Operating Companies profiting from huge rail disruption?

With the on-going closure of the railway line between Exeter and Newton Abbot due to storm damage at Dawlish and floods in the Somerset levels disrupting journeys between Bristol and Exeter, the Green Party in the South West is questioning whether Train Operating Companies (TOCs) are profiting from the disruption.  

The Green Party says that the complex compensation models used by the privatised rail industry may result in train operators making a profit out of delays [1]. Network Rail compensates TOCs when they are not able to provide access to the railway, as is the case at Dawlish and in Somerset. The Companies can also submit claims to the Department for Transport for lost revenue due to the closure of the railway. Greens want to know whether these compensation payments will be higher than losses of revenue and payments made to passengers, and therefore add to Company profits. The question of compensation payments is just one example of how the private, franchise-based contractual model leads to a huge waste of money, say the Green Party.

Prospective Green Party candidate for Exeter and long-time transport campaigner, Andrew Bell, said:

"We challenge the Train Operating Companies to tell us straight whether or not they are profiteering from the chaos and misery inflicted on thousands of passengers in recent weeks. We predicted all along that the extensive storm damage at Dawlish would take far longer to repair than originally forecast. I am sure passengers would welcome an assurance from the TOCs that they are not making a profit out of this prolonged period of disruption. Whatever the answer to this crucial question it is quite clear that the UK’s complex and fragmented privatised rail industry ends up costing passengers and taxpayers more. Greens believe in a railway for the common good, not for private profit. That means, unequivocally, public ownership of our railways"

The Greens argue that in the days of British Rail, compensation was simpler and more flexible, and crucially, far cheaper. They are calling for the Train Operating Companies to be taken back into public ownership as their franchises come to an end or if they fail to meet the terms of their contracts. They point to the East Coast Mainline as a successful publically owned rail company. An epetition set up by lead South West Green Party European candidate, Dr Molly Scott Cato, calls for the Great Western Franchise to be taken back into public ownership when the franchise ends next year and has so far received 1500 signatures. [2]

Notes

[1] The bewildering world of compensation, Christian Wolmar, transport commentator: http://www.christianwolmar.co.uk/2013/07/rail-725-the-bewildering-world-of-compensation/ 

[2] South West Green Party are calling for the return of the Great Western rail franchise to public ownership when the current franchise operated by First Group comes up for renewal in 2015: http://epetitions.direct.gov.uk/petitions/56244

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