At Romford station, in the Essex centre of “taking back control”, there’s a choice of trains into London: those run by the Dutch, or those run by the Chinese. Anyone heading for nearby Basildon has to change at Upminster and pay a fare to the Italian firm that has been operating C2C since January.
Welsh railways fell to German-owned Arriva long ago, while ScotRail is also in the hands of the Netherlands’ Abellio. The French, as part of Govia, own much of Britain’s biggest commuter franchises, including Southern Rail. Still, the news last week that South West Trains – serving destinations such as Weymouth and Windsor from Waterloo – would from August be operated by First MTR, partly owned by the Hong Kong government, marked a tipping point in Britain’s rail franchising.
With the transfer of this network, which has been operated since 1995 by Britain’s Stagecoach, one in two of the 1.7bn passenger journeys made in the UK each year will be on trains operated by foreign firms. And all of those firms are ultimately owned by foreign states – which outrages unions and others who call rail privatisation into question.
Mick Whelan, general secretary of train drivers’ union Aslef, said: “It is savagely ironic that the Tories say they don’t believe in state control, yet are perfectly happy to allow Britain’s train companies to be run by state-owned railways – as long as it’s another state!”
Some believe that Britain’s departure from the EU could prompt reform. Mick Cash, general secretary of the RMT union, says: “With the government triggering article 50, and freeing the UK from EU rail directives, there is now no excuse at all for carrying on with the wholesale rip-off that exports British fare payers’ cash overseas.”
But few other EU states opened their networks to competition the way Britain has. British firms such as National Express do have contracts in Germany for local and regional networks, but long-term franchises of such scale, revenues and potential profits have been a peculiarly British gift.
Yet foreign firms are expanding as domestic transport groups start to question whether they can afford the risk. National Express has quit the UK rail market altogether, selling C2C to Trenitalia this year. Stagecoach let itself be outbid by First MTR, and has struggled with East Coast. Passenger growth has slowed after a recent boom, and at least one losing bidder for the Greater Anglia franchise retained last year by Abellio privately admitted to relief, having seen the figures.
One industry source said: “People have been bidding bonkers numbers. But these foreign firms can absorb more risk because they are state-backed.”
Train operators’ total UK income in 2015-16 was £12.4bn, including fares and government subsidy, according to the Office of Rail and Road, while expenditure was £12.1bn, only £285m short of that. Dividends paid last year included £15m to Deutsche Bahn via Arriva Wales, £20m to Northern owner (until April 2016) Abellio, and a share of £59m from Govia’s franchises to SNCF. A 2013 report by the Centre for Research on Socio-Cultural Change at the University of Manchester found that the Wales and Northern franchises had paid out similar levels of dividend, £176m, between 2007 and 2011, accounting for all of their profits – profits that wouldn’t exist without £2.5bn in government subsidies.
Is this, as the RMT suggests, entirely “plunder”? Not necessarily, said Chris Cheek of Passenger Transport: “You cannot assume that all the money is repatriated. Abellio and Arriva, for example, have bus businesses in the UK, so may well be reinvesting profits in that. Keolis helped build the Nottingham tram extension which opened last year. ”
And he says FirstGroup, Stagecoach and National Express all have overseas interests, albeit more bus than rail.