Network Rail, the successor to Railtrack, said that it had moved into the black for the first time but nevertheless increased its request for further funding from the Government.
Despite the rail operator’s new-found profitability, it asked yesterday for an extra £29 billion in addition to the £4 billion a year that it already receives in subsidy. It said that more cash must be provided if it is to handle an expected 30 per cent jump in passenger numbers over the next decade.
Rail unions hit out at the apparent smugness of Network Rail yesterday after the group declared itself a “success story” on reporting its profitability.
Keith Norman, the general secretary of Aslef, the train drivers’ union, said: “Ask any commuter waiting at a bleak railway station for an overcrowded train how pleased they are about profit levels and they will tell you what the real priorities should be. People want regular services, decent conditions and modern trains.”
Network Rail said that as a result of cutting costs and a surge in revenue, it had managed to report a £747 million profit for the six months ending September 30. That compares with a £108 million loss for the same period a year earlier.
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The group identified two possible uses for the profit: to invest in the rail network, which it claims has suffered from underinvestment for nearly 50 years; and to reduce its £18 billion debt pile.
The four-year-old successor to the ill-fated Railtrack is fighting to restore an accident-prone rail system that was once described by the regulator as suffering a “nervous breakdown”.
John Armitt, the chief executive of Network Rail, said: “We have got to play catch-up.
We’re all pleased that things are getting better, but we recognise that there’s a lot to do to meet expectations in the future.”
Mr Armitt, the former chief executive of Costain, the construction company, said that he expected Network Rail’s profit to remain at similar levels in the future.
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He also predicted that the Government’s renewed focus on greener forms of transport would bolster its request for £29 billion to renew the railways and expand capacity.
An inquiry led by Rod Eddington, the former chief executive of BA, is expected to recommend next week that charges on motorists be raised to help lower pollution.
Operating costs climbed 3 per cent to £1.68 billion as expenses before depreciation slipped 1.5 per cent. ()
In the past 2½ years, management at Network Rail has cut £1.1 billion in costs by renegotiating contracts and moving maintenance in-house. The company may also opt to raise money from the City by issuing bonds. It is currently in talks with the Government and rail regulator over its proposals to borrow money from the City by issuing bonds without a state guarantee.
The company said that 89 per cent of trains were punctual in eight of the past ten months, the best level in eight years. It is awaiting the results of the Government’s statement next July which will reveal its long-term strategy for the country’s rail system.
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Money matters
£3.5m Fine for breaches of health and safety laws over the Hatfield crash
£4bn Annual subsidy from the Government
£29bn Network Rail’s latest request for Government funding
£18bn Current debt levels
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£3bn Amount Network Rail needs to borrow in the next three years
Tough journey
1994: Railtrack is born after John Major privatises the railway network
1996: Railtrack raises £1.93 billion for the Government when it floats
1999: 31 die when trains collide at Ladbroke Grove
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2000: Four people die in the crash at Hatfield
2001: Transport Secretary Stephen Byers tries to put Railtrack into administration
2002: Seven people die and 76 are injured in a crash at Potters Bar. Network Rail replaces Railtrack
2003: Outcry over £1.8 million in bonuses for Network Rail bosses
2005: Network Rail fined £3.5 million for health and safety breaches at Hatfield
2005: The Crown Prosecution Service says it will not charge Network Rail over the Potters Bar crash
Nov 2006: Network Rail pleads guilty to breaching health and safety laws before Ladbroke Grove crash. Network Rail reports £747 million surplus