The Financial Times reported that Porterbrook, one of the three main rolling stock companies that own Britain’s trains, has been sold for an undisclosed sum. The company owns and manages nearly 6,000 passenger and freight vehicles which are leased to train operators such as Great Western Trains, South West Trains and Northern Rail.
Porterbrook has been sold to a consortium which includes an Australian asset manager Hastings, Canada’s Alberta Investment Management Corporation and EDF Invest of France. Porterbrook has been sold on a number of times since it was set up in 1994 when British Rail was privatised. At the time there were two other companies set up by the government, Angel Trains and Eversholt. Each received about one third of the rolling stock.
This set-up was scrutinised in 2009 when the rail regulator called in the Competition Commission to look into whether they were overcharging. The Commission concluded that the three could cost the taxpayer £100 million a year by over-charging, though it blamed the structure on the rail franchising system set up by John Major for selling the companies cheaply at the time of privatisation (where have we heard that before?).
Apparently the Department of Transport is trying to bypass the rolling stock owners, buying trains directly for Thameslink and Crossrail and directly awarding a contract for new intercity trains on two lines.
The FT says that the sale of Porterbrook “comes at a significant time” for the industry. Network Rail has been effectively “re-nationalised”, with its £32 billion debt shifted onto the Treasury books. You will remember that privatisation was supposedly designed to save the state money and was predicted to lead to a more efficient rail network. The cost of rebuilding the network has, of course, been bloated by the subsidies that the train operators have been given and the profits that have been leached away, underwritten by the tax payer. The train operating companies pay dividends to their shareholders from subsidies provided courtesy of the taxpayer, whilst paying less to the use the track than it costs to maintain it.
A chronic shortage of trains will worsen in April under a leasing agreement
The FT also reported the case of the Transpennine Express which will lose 9 of its 70 trains to Chiltern Railways in Oxfordshire, after Chiltern struck a deal with the leasing company. Government figures show the franchise to be one of the most over-crowded in the country, after doubling passenger numbers in a decade to 26 million. Almost a third of its passengers into Manchester have to stand in the morning rush hour.
TPE leased the trains from Porterbrook for the duration of its franchise. The lease was extended for a year but Chiltern was able to offer a longer-term leasing deal, so TPE is left short of stock. Worsening the over-crowding on TPE is of no consequence to Porterbrook when it can secure its profits from a deal with Chiltern.
Meanwhile, the Rail Minister Claire Perry (I hadn’t heard of her either) has noticed that “The railways are getting full. We are in a fragile state.”