Bernard Ginns: Northern should share dividends with the real investors

So should you, because as a taxpayer you contributed £339m towards its £571.9m turnover last year.

And if you happen to use Northern Rail’s services, you will be contributing, and increasingly so, to passenger incomes.

The train operator hiked its fares this month by as much as 8 per cent in West Yorkshire.

Why then is the company so reluctant to talk to me about how much it pays its directors and its other shareholders?

Last week, I asked a spokeswoman to detail the remuneration of the directors for Northern Rail Ltd.

I also asked who received the £22.5m paid in dividends last year. The company is a joint venture owned by Serco and Abellio, the UK arm of Dutch railway operator Nederlandse Spoorwegen.

The spokeswoman came back with the following response: “As you will appreciate, our financial information is of a commercially sensitive nature and therefore we are unable to elaborate on the extensive information already in the public domain.”

Yesterday, the company told me that its highest paid director – assumed to be MD Ian Bevan – received emoluments of £189,000, plus £21,000 pension costs, during the year ending January 8, 2011. This is a decrease from the previous year, when the figures were £194,000 plus £24,000.

That’s still a handsome package, particularly for someone running a “business” where nearly 60 per cent of revenues came from the taxpayer via a grant from the Department of Transport.

I don’t understand why the company is so sensitive about its executive pay and dividends. It would surely be better to come out and be more open, given that Northern Rail is in the business of providing essential services that we all depend on.

As I’ve said in past columns, executive pay will become an increasingly big issue for businesses as the economy stutters and the gap between rich and poor grows ever wider.

At the weekend, Prime Minister David Cameron said it is “very likely” that legislation to curb excessive executive pay, including giving shareholders new voting powers, will be set out in the spring.

IN my opinion, we are paying first-class prices for a second class service on Northern Rail’s trains.

Most recent accounts show that the company spent £2.1m on capital investment out of combined operating expenditures of £534m.

The same year, the company made a pre-tax profit in the year of £40m.

The Northern Rail spokeswoman told me that the parent companies have made “non-contractual” investment of £30m for capital projects including significant station and rolling stock refurbishments.

Northern Rail uses the term “non-contractual” because some genius in Westminster awarded the franchise on the basis of zero-growth, which means there is no legal obligation to run additional services despite passenger numbers soaring from 60m to 90m since 2004.

I pray that local authorities and passenger groups will learn from this if they are successful in their efforts to win powers to award franchises from 2013.

At least business groups are calling for things to be put right.

Margaret Wood, chairwoman of the IoD in Yorkshire, said: “Business and passengers are being let down by outdated rolling stock and a sometimes second-rate service.

“There has been reinvestment in the infrastructure but there needs to be more to help business in Yorkshire take advantage of any opportunity that presents itself.”

Charlotte Britton, chair of the West Yorkshire IoD, added: “It can’t be profit at whatever costs and the balance between keeping the shareholders versus passengers satisfied is difficult but needs addressing.

“Reinvesting a proportion of the profit back into the rail infrastructure would be the right thing to do.”

Andrew Palmer, regional director of the CBI, said that “the renewal and maintenance of infrastructure has the potential to drive growth in the short term, by getting spades in the ground”.

Meanwhile, Anthony Smith, chief executive of watchdog Passenger Focus, said: “Passengers want to see healthy and successful train companies, however, it is important that they also get a share of the dividends.”

While it’s easy to kick publicly-funded companies for being less than transparent over executive pay, the Government has the biggest influence on fare rises and service levels, as the Campaign for Better Transport lobby group pointed out.

Richard Hebditch, a director, said: “It’s ultimately up to the Government to make sure that travelling by rail is affordable, reliable and convenient.”