Source · Select Committees · Public Accounts Committee
Recommendation 9
9
Acknowledged
Delays to rail reform have resulted in unsustainable subsidy levels and increased taxpayer costs.
Conclusion
Delays to reform have added pressure to the Department’s finances and higher costs to the taxpayer for longer. The Department’s costs now exceed the revenue it receives and at a level that the Department views as unsustainable – the Department spent £3.1 billion subsidising train services in 2022–23.19 We asked the Department about the level of government subsidy for the railways and what is sustainable. The Department told us that there is no one level it could identify as sustainable but that the level of funding and subsidy for the railway is not at a sustainable level and that it needs to do two things: increase revenues and reduce costs.20
Government Response Summary
The government agrees the level of funding and subsidy for the railway is not sustainable and says it needs to increase revenues and reduce costs. They are committed to delivering a unified and simplified governance structure for the railways, alongside passenger train services under public ownership, with the objective of providing improved services for passengers and better value for money for taxpayers.
Government Response
Acknowledged
HM Government
Acknowledged
2.4 The government agrees with the Committee’s recommendation. Target implementation date: Spring 2025 2.5 The government is committed to delivering a unified and simplified governance structure for the railways, alongside passenger train services under public ownership, with the 51 objective of providing improved services for passengers and better value for money for taxpayers. This model will address current disincentives by ensuring costs and revenue across infrastructure and operations are aligned to optimize performance and drive efficiency. 2.6 The department expects to see these reforms delivered over the course of this parliamentary term, as new legislation is enacted, and private train operators move into public ownership. 2.7 During the transition to these new arrangements, the department will continue to use the annual business planning exercise with the train operating companies to ensure that costs are being closely managed, but also that opportunities for revenue growth are being considered. The department’s objective is to make the cost base as efficient as possible, increasing revenue and passenger numbers and reducing the net taxpayer subsidy. The department will work closely with HM Treasury to ensure costs and revenues are managed effectively.