MPs call for more transparency over rail ‘profiteering’

Train company pay and profits are under the microscope following a report yesterday by MPs which came just two days after passengers were hit by above-inflation fare rises.

The report from the House of Commons Transport Committee has called for more transparency in the finances of the rail industry in order to “shine a light on complacent management, waste and profiteering”.

Responding, the Association of Train Operating Companies said: “We flatly reject the unfounded accusation that train companies are profiteering, an allegation which appears to be based on hearsay and flies in the face of 
the report’s own explicit statement that profits are ‘relatively small’.”

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Transport company FirstGroup runs five UK rail companies – First Capital Connect, Great Western, Hull Trains, TransPennine Express and ScotRail.

In the year ending March 2012, FirstGroup made an operating profit of £110.5m on its UK rail business, with its revenue being £2.5bn.

Chief executive Tim O’Toole’s basic salary for 2012 was £846,000, plus a £134,000 pension allowance and £75,000 for what was described as benefits in kind.

FirstGroup’s commercial director Sidney Barrie, who resigned last March, was on a salary 
of £349,000, while finance director Jeff Carr, who resigned in 
November 2011, had been on £280,000.

Another giant transport company, National Express, runs the London to Tilbury and Southend rail line c2c and also operated, until last February, the East Anglia franchise.

For the year 2011, National Express’s revenue from its UK rail operations was £688.3m, while operating profit was £43.4m.

The company’s chief executive Dean Finch is on £550,000 a year, and it was announced in August 2012 that he had been awarded an extra performance-based bonus involving thousands of free shares.

National Express group finance director Jez Maiden is on £420,000 a year, with chairman John Devaney, who is standing down next month, on £225,000.

Another rail industry parent company is the Go-Ahead Group which, with French company Keolis, owns rail operator Govia which runs the London Midland, Southern, Southeastern and Gatwick Express train companies.

London Midland has been plagued with staff shortage problems in recent months and last month the Government announced the company would be offering a £7m compensation package including free travel days for season ticket holders.

In the 12 months ending June 2012, Go-Ahead’s rail operation revenue was £1.73bn and its operating profit was £40m.

Group chief executive David Brown was on a salary of £510,000, with finance director Keith Down on £326,000.