Train cooperative on track in SW England?

Paul Gosling reports:

Electrification of the London to Swansea rail line is good news for public transport users in the South West and the Government’s approval for Network Rail to meet the £1 billion cost is a demonstration of real commitment not just to the rail system, but also to combating climate change.

But for many people away from the main urban centres, what is needed is more than just faster journey times to London. They demand connectivity that reduces rural isolation, makes journeys faster, cheaper and easier and improves the economic prospects of smaller towns and villages.

This is where Go! Co-operative comes in, which is not only one of the newest co-ops to be established, but also the most recently established train operating company. Its prospectus for raising capital is about to be published, with the ambition of raising a quarter of a million pounds over the next two years.

Go! Co-op intends to be the fifth train operating company taking advantage of the principle of open access to rail lines that is enshrined in legislation and which is intended to increase the provision of services by sharing existing lines. This provision enables additional services to operate alongside the main rail franchises. Existing open access rail operators include Heathrow Express and Hull Trains.

However, Go! Co-op would be the first open access train provider running as a multi-stakeholder co-operative that brings together the interests of commuters, workers and the communities that would be served, via their local authorities. It is backed by some heritage railway operators.

The co-operative’s business planning is already well developed, thanks to seed-corn funding supplied by Co-operatives UK and the Co-operative Group, through the Co-operative Fund, backed by practical support from the Somerset Co-operative Services.

Go! is looking at various routes, including local branch line operations and longer cross country services. Some of these involve open access services on Network Rail lines, while others would operate in partnership with heritage rail and other independent railway owners.

At this stage, it is not possible to say which routes will be pursued — detailed studies on line capacity and passenger demand are needed first, as well as more negotiation with potential partners.

The chair of Go! Co-op is well known co-operative activist, Tim Pearce — the South West regional organiser for the Co-operative Party until he retired three and a half years ago.

“Existing train services run to London,” explains Mr Pearce. “Our intention is to serve other communities that don’t have good connections to anywhere. Cross-country connections are important. We are looking to potential routes in the south of England on existing rail networks.”

The Go! Co-op initiative has been given extra impetus by the recent publication of the Association of Train Operating Companies’ (ATOC) document Connecting Communities, which supports the principle of much improved connectivity for isolated communities by making greater use of lines that, at present, run few services. “We are interested in underused and also closed lines and closed stations, but that’s a lot of money,” says Mr Pearce.

“We are interested in the electrification, but that is a long time ahead, at least five years. It does raise interest in the rail network and the South West is getting a fairer crack of the whip than it has in the past.

“We want to develop routes in the South, but including the North. We are hoping to develop routes from the South to the Midlands, servicing the West Midlands conurbations, developing links where they don’t exist.

“We are trying to raise money from potential commuters and from councils along the rail lines. We will run it as a multi-stakeholder co-op.

“The communities that benefit will have control over the service. We envisage a scenario where the guy who pushes the trolley can be on the board. I have been very impressed by the results of [societies’] board elections where you get electricians and so on elected to the board.”

Mr Pearce’s involvement in the project arose from a motion put forward to Co-operative Party Conference in 2007, which called for the mutualisation of Network Rail. “We have made some progress there,” says Mr Pearce. “We still hope to get a result from that and are fairly optimistic.

“We then organised a conference last year [on Network Rail mutualisation]. That was successful. It had a lot of rail people and Co-op people there. Basically the idea [for Go!] started to gel about that time and because of that conference.” With that momentum established, one of the founders the project — Alex Lawrie of Somerset Co-operative Services — invited Mr Pearce to get involved.

The timetable for progress is as impressively ambitious as the project itself. The co-op has already been authorised by the Financial Services Authority to raise the funds. It is also working with the FSA to develop rules that allow for withdrawable and transferable Industrial and Provident Society share capital raised from members and outside investors. Outside investors will have enough voting power to protect their investment, but in accordance with co-operative principles the passenger and employee members between them will have effective control.

Go! believes, given the example of the major fund raising achieved by windfarm co-ops, that it can raise the necessary investment. Assuming it does so, it hopes to gain route authorisation some time next year and begin services in 2011.

Ultimately, Go! has aspirations even beyond this — its motivation is to improve connections between communities, not just to run rail services. So it would also like to be involved in running bus services that feed the rail services and perhaps operate bike hire and car clubs.

It is one of the most impressive and ambitious co-operative projects to come forward in many years. But it is also firmly grounded in a sense of realism — it deserves wide support.

Rail for the people – or Brian Souter?

That’s the question. Should we have public transport or a subsidised cash-cow for a man made wealthy by the state?

RAIL UNION RMT today stepped up their pressure on the government to remove National Express from their rail franchises as new research shows that the company has made nearly half a billion pounds in profits from their rail operations in the past 10 years while sucking in nearly £2.5 billion in public subsidy over the same period.

Just under two weeks ago Transport Secretary Lord Adonis announced that he was taking the failed National Express franchise on East Coast Mainline back into public ownership. Since then, the company have made bullish noises that they will fight to retain the rights to run the service and have also thrown down a gauntlet to the government over National Express East Anglia and c2c which they should be stripped of under the “cross-default” clause.

Today, Tuesday July 14, a parliamentary adjournment debate will take place under the title Rail Services on the East Coast Mainline led by York MP Hugh Bayley where a growing number of MP’s will be applying pressure on ministers for National Express to be stripped of their rail franchises.

Bob Crow, RMT general secretary, said today:

“It’s now two weeks since the government announced that they would be taking decisive action over National Express on the East Coast and we are stepping up the pressure for the company to be dumped as a matter of urgency and for their franchises to be nationalised on a permanent basis, not as a short term, crisis measure.

“National Express have been taking us all for a ride. Not only have they milked the best part of half a billion pounds out of their rail operations but they have sucked in £2.5 billion in public subsidies in the process.

“Now National Express are leaving a potential rail funding gap of £1 billion behind after their chaotic performance on the East Coast Mainline and once again it’s the travelling public and rail workers who are left to pick up the pieces. National Express, along with the rest of the rail privateers, should be kicked off the tracks for good.”

I’d go further than Bob – I’d like to see the privateers prosecuted for their theivery.

Nationalised Express – public ownership for East Coast rail route

Great news, as it is a step towards ending the corporate domination of our railways which has cost us dearly both as taxpayers and passengers.

The general secretary of the Rail, Maritime and Transport union has backed the move:

“RMT welcomes todays announcement by the Government on the renationalisation of the East Coast route but this shouldn’t be a short term, crisis measure.

“It should be a long term solution to the chaos that privatisation has brought to the UK’s most lucrative rail franchise.

“RMT’s national AGM will send a clear message to the Government today that they should strip National Express of their other franchises and use this opportuinity to begin the process of renationalising the rail network,” said Bob Crow.

John McDonnell MP, RMT Parliamentary Group Convenor, said:

“The public control of the East Coast Mainline franchise should be a stepping stone to full and permanent public ownership.

“This East Coast franchise should be used as a public sector benchmark – and if the public sector performs better then let’s have other franchises back in public ownership too.”

The Green Party agrees, saying

The government should go further. Under cross-default clauses, the Transport secretary, Lord Adonis, could strip National Express of all its contracts, now that the group has handed back one franchise.

The Green Party remains the only major party in Britain to call for the full re-nationalisation of the railways.

Rupert Read, candidate for Norwich North and Green Party spokesperson on public services, said:

“Train privatisation, from the beginning, was a very flawed model. We can’t keep socialising private companies’ losses and privatising their profits. We need a national train network under direct public control and with full public accountability.”

“National Express must pay back whatever monies are outstanding from their rail franchise of the East Coast Main Line – it would be quite wrong for National Express to continue to profit on some lines, while the taxpayer has to foot the bill on others. To use the government’s own rhetoric, this should be a zero-tolerance issue.”

Sir Richard Branson, co-owner of the Virgin west coast franchise, has expressed an interest in bidding for the east coast franchise if it became available.

Read responded to this by saying: “Virgin would then have control of England-Scotland services, as well as London to Birmingham, Liverpool, Manchester, Leeds and Doncaster. The entire idea of privatisation was to inject competition, and this would be substituting a public monopoly for a private monopoly. That cannot be allowed to happen, and as a Green MP for Norwich North, I would be absolutely steadfast in resisting it.”

Keep the Metro public, say MPs and trade unions

More information on the campaign to keep the best performing rail service in public hands, from the TUC:

There has been a strong trade union-led campaign welcoming the massive government investment in the Metro, but opposing any moves to allow private operators to cash in on this opportunity.

The campaign welcomes the government commitment for significant investment to facilitate the reinvigoration of the Tyne and Wear Metro.

Tyne and Wear Metro is an integral part of the social, economic and environmental infrastructure in the region

Tyne and Wear Metro is overwhelmingly valued and appreciated by the people and business community in the area

Tyne and Wear Metro has an excellent track record of service delivery, ahead of any private sector train operator, including punctuality, reliability, health and safety and customer service.

Kevin Rowan, Northern TUC Regional Secretary said, ‘The Metro is a major economic, social and environmental asset for Tyne and Wear and the investment to reinvigorate the system is desperately needed and very welcome.

‘It is an excellent example of public service delivery in the public sector, the fact that Nexus have been nominated for the Train Operating Company of the Year Award is testament to the terrific staff working on the Metro.

‘We are confident that the service can remain within the public sector – and adamant that it should.’

Jim Cousins, MP for Newcastle Central said: ‘Metro is one of the most successful public enterprises in England. I will do everything I can keep it as a public enterprise. The decision of Nexus to ask for bids for a single contract covering operation and renewal creates a very juicy target. It’s worth over a billion pounds over 7-9 years. I will be backing the ‘in house’ bid to keep Metro public.’

Councillor Paul Watson, Leader Sunderland City Council said: ”A £350M investment in the Metro infrastructure is a clear demonstration of both Local and National Government’s determination to ensure that this region has the best public transport system achievable.

‘It is good to see Nexus Staff and Management working together to facilitate the in-house bid, which I am sure will be an extremely strong and competitive one. This process will, I feel, be good for Sunderland, the Region and the Metro.’

Sharon Hodgson, MP for Gateshead said: ‘The Metro has been serving my constituency for almost thirty years and I’m delighted that the Government is committed to keeping the Metro running for another thirty years and beyond. It provides an important service to people of all ages across Tyne and Wear whether it is getting them to work, to the shops or to school. I’m confident that this funding will give Tyne and Wear a Metro service which is fit for the 21st century.’

Dave Clelland, MP for Tyne Bridge said: ‘I very much welcome this new lease of life that Metro has been given by the Labour government. The system can now continue to serve the people of Tyne and Wear for the next 25 years as it has over the past 25.’

Alan Campbell, MP for Tynemouth said: ‘My constituents value the metro but recognise it needs updating. The Government investment is welcome and a huge commitment to the future economic wellbeing of our area.’

Chris Mullin, MP for Sunderland South said: ‘The Metro is greatly valued in Sunderland. It is well-managed and efficient and I hope it will remain wholly in the public sector.’

NOTES TO EDITORS:

The Metro is an established and integral part of the North East social and economic infrastructure and has been for almost 30 years. The Metro is publicly owned by all five Tyne and Wear Councils. As it stands, it consistently out-performs all other UK transport systems. It has the:

Best safety record

Most productive staff

Lowest level of public subsidy

Highest level of trains actually run (99.5%)

Highest % of trains arriving on time (96.25%)

However, after 30 years of consistent heavy use it is in need of modernising to keep it the best and the government have made a very welcome commitment to inject a £350 million investment to facilitate the reinvigoration of the Tyne and Wear Metro.

There is currently a procurement process to show best value for the investment including an in-house bid from NEXUS which is being supported by Metro trade unions.

Secretive plans to privatise UK’s best performing rail service

Anyone who has ever been on the Metro will have been struck by the contrast to our privatised railways.

As with Royal Mail, attempts to involve the private sector in this service are couched in terms of gaining “investment” and “value for money”, debate is one-sided with privatisation offered up as the only solution, and public ownership derided whatever the truth of the matter.

From the Morning Star:

Transport bosses slammed for ‘secret’ Metro plans
(Thursday 22 January 2009)

ANTI-RAIL privatisation campaigners protested at the transport authority’s failure to come clean on its plans for the Tyne and Wear Metro on Thursday.

Protesters, including members of rail union RMT, demonstrated outside a meeting of the county’s Passenger Transport Authority (PTA) in Newcastle yesterday morning before attending the meeting.

The government has pledged £300 million to “reinvigorate” the service, which is already the best-performing in Britain. But Metro operator Nexus intends to invite private-sector bids to operate passenger services and maintain infrastructure.

An ICM poll conducted for the Keep Metro Public campaign in September found that 60 per cent of residents wanted the service to be publicly run, compared to just 22 per cent who favoured private management.

RMT regional organiser Stan Herschel pointed out: “We’ve already been stopped from speaking at PTA meetings, but now the authority has failed to keep its promise to respond to questions put to it in writing.

“This is supposed to be a publicly accountable authority, yet it appears to be doing everything it can to avoid answering questions about the future of the Metro. The PTA knows that there is overwhelming support for the campaign to keep the Metro public, yet for some reason it seems to think it can get away with ignoring public opinion.”

He stressed: “The authority spends huge sums of public money and we have the right to question what is being done with it, not least when there are plans to transform our Metro into a cash cow for privateers.”

Is progressive taxation is back on the agenda?

The Compass group has welcomed the Pre-Budget Report with as much optimism as the Chancellor’s asessment of the depth of the recession:

Neal Lawson chair of Compass said: “Today’s Pre-Budget Report marks a move away from the Neo-Liberal/free market economic consensus pursued by both Labour and Conservative governments of the past 30 years – but this should not just be a blip before normal service, in the shape of speculative consumer capitalism, is resumed – the government needs to make this a turning point that leads to the moral transformation of our society”.

Jon Cruddas MP said: “This is exactly the kind of measure that we’ve been advocating for a while now and it’s good news for people like my constituents in Dagenham. This should be the first stage in re-balancing the tax system so it’s fairer for middle and low income earners, as well as kick-starting the economy in the short term. When the new US administration takes office then we have the chance to move in to another phase – an international crackdown on corporate tax evasion. Meanwhile, Cameron is now retreating from New Conservatism into orthodox Thatcherite economics and we have to expose that.”

Gavin Hayes General Secretary of Compass said: “A financial crisis that was in part caused by the excesses and risky behaviour of those at the top should not be allowed to unnecessarily hurt the rest of us, so today’s announcement on reducing VAT, whilst at the same time announcing plans to increase the tax burden on the super-rich should both be welcomed, it is absolutely right for government to limit the impact of the recession by using pragmatic and sensible measures such as these.”

As Richard Murphy points out, cutting VAT by such a small amount isn’t likely to impact upon retail prices for consumers:

On an item costing £4.99 the VAT saving will be under 11p. Can you see anyone shifting that price to £4.89?

On £500 (VAT inclusive price) the saving is £10.60. That’s neither here or there: if you are going to spend £500 then £10.60 or so will not change the decision. Other influences are much stronger.

So at low price points this is a boost for the retailer who will take much of the gain. I really do not expect them to pass this on. At high price points I doubt the impact.

Either way the saving goes to marginal jobs in the UK, and Woolworths won’t be saved by this, whilst cheap imports are the only likely sector to see a boost. The business to business sector will see none at all: VAT does not impact them.

But it’s more than that: this might fuel deflation, which we can ill afford. So it’s a mistake.

VAT is regressive, but not as badly as some taxes (e.g. council tax) so the poorest who need help will not benefit most.

John McDonnell MP, chair of the Left Economics Advisory Panel said of the tax changes:

“The introduction of a higher rate of tax for high earners is long overdue but the Government’s proposals are hardly a revolution, and delaying them until after the next election is pointless. The higher rate should be the start of creating a fair tax reform agenda, redistributing wealth from the super rich in order to take the low paid out of taxation altogether.

“The Government should also move immediately to tackle the large scale tax avoidance by the corporate sector, introducing legislation to outlaw tax havens, mirroring the Obama bill in Congress. The public revulsion over City bonuses and bank executive salaries has opened the way for radical tax reform. Government must seize the moment.”

The Public and Commercial Services Union warns of the impact of so-called “efficiency savings” and points out that billions of pounds in taxes go uncollected:

Commenting, Mark Serwotka, PCS general secretary, said: “Further efficiency savings of £5 billion should not be a prelude to yet more job cuts, office closures and privatisation.

“Key public services, such as justice, welfare and tax are already struggling to cope against a backdrop of massive job cuts and office closures.

“Whilst the promise of additional funds for jobcentres is welcome, the government needs to reverse its job cuts programme across civil and public services to safeguard their delivery.

“Whilst the promise of additional funds for jobcentres is welcome, the government needs to reverse its job cuts programme across civil and public services to safeguard their delivery.

“For example the government should be looking at tackling the £21.5 billion worth of uncollected tax and £25 billion lost through tax evasion, by putting more resources into HMRC to claw back the billions in lost revenue, which could be ploughed into public services and stimulate the economy.”

The Morning Star‘s editorial is critical of the direction of travel signalled by the Pre-Budget Report, not so much a return to Real Labour but a continuation of Blue Labour:

Out of his own mouth
(Monday 24 November 2008)

CHANCELLOR Alistair Darling condemned himself out of his own mouth when he said that the central objective of his unambitious pre-budget report was to support firms and businesses going through difficult times.

That is why he opted for a cut of two-and-a-half percentage points on VAT, which will be absorbed into business income rather than find its way into lower prices.

Working people, especially those wondering how long they will be in a job, are unlikely to run out on a spending spree on the basis of a VAT cut.

And, if Mr Darling really wished to spark economic activity, he should have helped those on the lowest incomes whose extra cash would certainly have increased demand.

Those robbed when Gordon Brown abolished the 10 per cent tax rate should be compensated by being lifted out of income tax liability entirely.

State pensioners, whose living standards have been eroded every year since the Tories abolished the link with wages, those working for a totally inadequate minimum wage and others forced to exist on the jobseeker’s allowance pittance should receive a boost in their income.

It is pathetic that the Chancellor should be posing the possibility of no more than a 5 per cent increase to 45 per cent for tax on annual incomes over £150,000 and then only on condition that Labour wins the next general election.

This proposal will not bring any additional income to the Treasury in the life of this government. It’s not even of sufficient scale to encourage the electorate to vote Labour in the hope that it will switch the burden of taxation from working people to the rich.

Government failure to tackle the spiriting away of potential tax revenues of at least £25 billion a year through overseas tax avoidance centres, mainly in British crown territories, emphasises once more its priorities.

The bulk of taxation should fall on the shoulders of those able to pay rather than those too poor to afford avoidance schemes.

And the government should also lift the cap on National Insurance contributions, which is a hidden tax benefit for the better-paid, and introduce a wealth tax.

But the government must not restrict itself simply to measures calculated to increase demand.

It has a responsibility to intervene actively in the economy, especially since the banks have been quick to accept cheaper Bank of England lending and government investment but have not passed benefits on to small businesses seeking to weather the recession.

The government must put substance behind its much-vaunted commitments to environmental issues and to higher employment levels.

Financing at least 100,000 new council homes a year and a nationwide programme of renovating and insulating existing local authority properties could begin to tackle the housing crisis, improve energy efficiency and cut fuel bills.

Similarly, a crash programme of expanding the railways would not only improve the transportation network but increase demand for steel, concrete etc, safeguarding jobs in these industries as well as construction.

Unless the government adopts an economic programme with social justice at its heart, its cosmetic measures will simply prop up big business and ensure that costs of the recession will be paid for by workers.

Private rail industry profits from £1.3 billion in unpaid tax

[Friday]

Companies using deferred-tax loophole to fund leap in dividends

THE PRIVATE rail industry is profiteering on £1.3 billion in unpaid tax and is using a deferred-tax loophole intended to encourage investment to fund massive increases in dividend payouts to shareholders, Britain’s biggest rail union reveals today.

Nearly half of the £1.5 billion in dividends paid out in the last five years by nine private train operators and rolling-stock companies has been funded by unpaid tax, according to a detailed analysis for RMT by tax expert Richard Murphy of Tax Research.

Almost £1.3 billion of deferred tax is owed by the biggest six train-operating companies (Tocs) and the three rolling-stock leasing companies (Roscos) – but this is tax that will most likely never be paid, and is effectively a hidden subsidy that dramatically increases cash profit levels.

The report shows that the nine companies’ declared profits almost doubled from £435 million in 2002 to £810 million in 2006, but their declared tax charges remained almost constant at about £190 million a year throughout the period. The declared percentage rate fell from 43 per cent in 2002 to 24 per cent in 2006.

This though hides the real story. Tax is not paid on accounting profits. The accounts charge for goodwill is not, for example, allowed for tax. And the charge for tax in accounts includes ‘deferred tax’ – which this survey shows is never likely to be paid, as well as the current tax bill the company expects to settle in cash.

Comparing pre-goodwill profits and current tax charges that will actually be paid shows that these companies’ profits rose from £584 million in 2002 to £894 million in 2006, and that the tax they actually paid plummeted to £109 million in 2002 and just £71 million in 2006, at a rate of just 7.9 per cent in that year.

The study also reveals that by 2006 one pound in every three used to fund the private-sector rail operators was represented by deferred tax – which is in effect a tax-free loan from the government, with no repayment date.

“Deferred tax is supposed to be an allowance against investment and amounts to a hidden subsidy for rail firms, but it is being exploited to increase dividends to shareholders,” said report author Richard Murphy.

“Rail companies are hiding behind accounting rules when presenting their figures that let them suggest they’re paying more tax than they are, and that means the massive hidden subsidy the tax system gives them is not apparent. It should be,” Richard Murphy said.

“It might be legal but it shouldn’t be,” RMT general secretary Bob Crow said.

“Passengers are facing a future of massive fare increases and the government is cutting direct subsidy to the rail industry by £1.5 billion over the next six years, yet these private companies are sitting on a tax-break nest-egg worth £1.3 billion.

“This is money that should be funding railway engineering, but it is being used instead for financial engineering and turning hidden subsidies into pure profits for shareholders.

“At the very least the government should tell these companies to stump up the £1.3 billion they owe in tax and use the money to reverse the planned funding cuts.

“Better still they should face the fact that the private sector’s involvement in the railways is a barrier that stands in the way of delivering the growing, affordable people’s railway that our economy and environment desperately need,” Bob Crow said.

[...]

The companies whose accounts are analysed in the report are: First Group PLC; Go-Ahead Group PLC; Stagecoach Group PLC; Arriva PLC; National Express Group PLC; Virgin Rail Group PLC; Porterbrook Leasing Company Limited; HSBC Rail (UK) Limited, and Angel Trains Limited.

[...]

This report is based on detailed analysis of the accounts of six railway operating companies and three railway leasing companies operating in the UK. In each case their last five available sets of accounts were reviewed, meaning that the survey concentrates on the period 2002 to 2006.

In this period the declared profits of the companies in question increased from £435 million in 2002 to £810 million in 2006. Their sales income curiously varied little over the period, moving about an average of about £11.6 billion a year throughout the period.

The tax they paid did, however, fall dramatically over the period. According to their profit and loss accounts their tax charges fell from £188 million or 51.4% of reported profit in 2002 to £169 million in 2004, when the declared tax rate was 22.1%, a rate that was also seen in 2006.

But this is not the whole story. The profits these companies declare are not the profit figures on which they pay tax. Most of the railway operating companies (but not the rail leasing companies) have significant goodwill charges in their accounts which are highly unlikely to be tax deductible. This increases their taxable profits by this amount.

At the same time, all the companies include in their accounts charges for ‘deferred tax’, which can best be described as estimated amounts of tax that might be payable at some time in the future as a consequence of transactions that have already occurred, but with there being no certainty as to when, if, or ever that tax might be due. Overall the amount of deferred tax owed by these companies increased from £948 million to £1,297 million over the period. The increase was less than the total deferred tax charged against their profit by all the companies in the period, which totalled £527 million because of changes in the rules on the way the balances had to be accounted arising as a result of the introduction of International Financial Reporting Standards in 2005.

Two points are however clear: first that these balances seem unlikely to be paid and second that deferred tax charges can therefore be ignored as real tax charges. They should instead be considered to be interest free loans to the railway industry for which there is no repayment date. By 2006 one third of all the finance required by the industry was being provided by the government in this way without it taking any credit for the benefit it was providing.

Taking these two adjustments to the profit and tax charge into account a very different picture of tax paid is revealed. Profits now increased from £584 million before tax to £894 million before tax over the period. Taxes due fell from £109 million to £71 million. The tax rate fell from 18.7% to 7.9% (and just 3.8% in 2005).

If tax had been paid on these profits at the 30% headline UK corporation tax rate the sums due would have been £66 million in 2002 and £198 million in 2006. Over the period £731 million of tax was not paid as a result of the low tax rates the industry enjoyed.

Of this sum £527 million is explained by the deferred tax charges. According to the accounts of the companies themselves the second biggest reason is ‘prior year adjustments’. What this means is that they have not had to pay tax that they had declared they might. Almost certainly this means that tax planning arrangements the companies had presented to HM Revenue & Customs but were too cautious to assume would work were accepted as valid by that authority, or at least were not challenged.

The resulting impression is of an industry that has saved itself over £700 million in tax in five years and is sitting with £1.3 billion of unpaid tax on its balance sheet: tax that might never be paid but which is being used to provide one third of the funding required to keep this sector going.

Who benefits from this tax lost? Certainly not the government. And there’s no indication that it is the consumer. It must be the companies themselves. Profits of the companies surveyed almost doubled during this period. Their tax paid tumbled. And they paid almost £1.5 billion in dividends to shareholders in this five year period. Half of this sum was financed by tax not paid.

There is an obvious question. What better use could have been made of that tax not paid, in the railway industry or in society at large? And why have we allowed the railway industry become a mechanism for financial planning, one of whose primary purposes is to turn unpaid tax into an income stream for shareholders?

It’s certainly no way to run a railway.

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