Operators facing revenue-cost gap


■ Omicron reversed ridership revival

■ Treasury sustains revenue support

■ Costs continued to increase through 2020-21

Even before the pandemic, a little cloud like a man’s hand appeared out of the railway. After years of the franchised operators paying a net premium to Government, in 2018-19 the situation reversed (Table 1).

Given the railway has a massive fixed cost base, this should have generated more attention than it received at the time. If the railway with its fixed cost base effectively required more subsidy as ridership was reaching a new post-war high, something must have been amiss with the economies of scale.

As Table 1 shows, the impact of the sudden lockdown turned railway funding on its head. A recurring trope in social media in recent months has been the claim that the evil Tories have returned to form and are using the pandemic as a cover to cut back the railways. Figure 1 suggests otherwise.

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