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The fat cat controllers who stole the railways

This article is over 7 years, 2 months old
As the fight to stop bosses pushing the dangerous driver only operation throughout the rail network spreads, Raymie Kiernan lifts the lid on the private interests at work behind the scenes in the train industry
Issue 2548
Private interests behind the rolling stock operating companies are milking the system
Private interests behind the rolling stock operating companies are milking the system (Pic: Pixabay)

Every time you pay for a train ticket the money goes to fill the coffers of some of the wealthiest private equity funds in the world.

And that overpriced buffet car sandwich isn’t only funding billionaire fraudster Richard Branson’s lifestyle. It also finds its way to the top investment banks.

Train operators such as Arriva or Govia own nothing but their branding. They operate stations that are owned by Network Rail and trains owned by Roscos—or “rolling stock operating companies”. Staff are inherited and passed on from operator to operator.

Arriva and Govia are pushing to introduce driver only operation (DOO) on new trains, and passengers will pay exorbitant fares to travel on them.

Those trains are effectively funded by vulture capitalists of one kind or another.Operators hire trains from firms such as Angel Trains, one of nine Roscos that own the fleet of passenger and freight trains in Britain.

But these firms don’t build trains—they only finance them and profit handsomely from the rent.

The 1994 privatisation of British Rail created three rolling stock firms which grabbed roughly a third of the former state fleet each.

As with other privatisations, well-placed former senior managers were part of buyouts in the state-sponsored fire sale.

They sold up and made millions as the big players moved in. When Porterbrook and Eversholt Rail Group were first sold on after privatisation vulture capitalists made £400 million and £316 million respectively.

It was not unlike the Tories’ Royal Mail selloff scandal a couple of years ago.


Angel Trains is the other one of the original three Roscos. Until 1997, Japanese investment bank Nomura controlled it. It made over £300 million after Angel became a wholly owned subsidiary of RBS bank, in a sale just shy of £400 million.

After the 2008 economic crash RBS sold Angel Trains for £3.6 billion.

Today the firm has three major shareholders that have since bought out the rest of the original consortium that RBS sold it to.

One of them is private equity firm AMP Capital, another is the huge Canadian pension fund managers PSP Investments.

Both claim almost £100 billion in investments globally. AMP announced half yearly profits in August last year of over £400 million.

The third is London Stock Exchange-listed International Public Partnerships Limited, an “infrastructure investment company”.

It specialises in “private finance initiative (PFI), public private partnerships (PPP) and similar methods”.

The firm has been handing its shareholders cash dividends, increasing 2.5 percent a year on average for the last decade.

It recorded £175 million profit in 2016, nearly double what it made in 2015.

And the bosses at Angel boast about how the firm “is passionate about financing” and is “unique” in providing its stock to all train operators in Britain.

It creamed over £350 million from revenues last year.

It goes on to boast “that the national fleet will grow by between 51 and 99 percent, with an average of 17 new trains being delivered weekly between now and 2020”.


Angel’s shareholders have a nice cash cow for many years to come—and it’s our cash they’re creaming off.

Porterbrook and Eversholt own the lion’s share of Britain’s train fleet along with Angel Trains.

Porterbrook—whose owner investors now include Deutsche Bank—doubled its profits in 2016.

And one of Eversholt’s major shareholders is US investment bank Morgan Stanley, which posted a £1.2 billion profit last year.

The consortium that bought up Eversholt in 2010 included investment fund 3i infrastructure.

When 3i sold its stake in 2015 it netted over £350 million in proceeds from the sale. And now even more firms are fighting for space at the trough.

Over the last year private equity fund SL Capital and investment firm Rock Infrastructure have financed two deals for new trains for a total of £800 million.

This is just one section of the privatised rail industry. But the global interests at stake in it run into the billions over the length of the franchises that their investments are funding trains for.

But none of them have any interest in running safe, reliable and comfortable train journeys for the travelling public.

They are only interested in getting a slice of the privatisation free-for-all being fed by the Tories.

The gravy train has gone on long enough—it’s time to renationalise the rail.

Workers’ resistance causes severe delays to train bosses

Workers across three rail firms are resisting the Tories’ plans to soften up the rail industry for even more privatisation.

RMT union members, mainly train guards, were set for a coordinated strike against one important aspect of their agenda on Saturday—the extension of driver only operation (DOO).

DOO was part of the conclusion in 2011 of the McNulty rail review, initially set up by New Labour. It was designed to maintain rail firms’ profits and to continue with the rail privatisations.

New Labour was voted out before it concluded but the Tories fervently adopted its recommendations.

Not only did McNulty’s prescription of mass job cuts to boost profit appeal to the Tories, they saw an opportunity to try and weaken the unions.

How runaway train profits derail safety
How runaway train profits derail safety
  Read More

The rail fat cats unsurprisingly backed it too. They don’t care that DOO is dangerous. And taking a worker whose responsibility is the safety and welfare of passengers off trains at a time when passenger numbers are rising will make it more dangerous still.

The Tory objective to extend DOO is clashing with rail workers’ determination to defend the safety of passengers. This has fuelled the disputes on the railways over the last year. Slashing guard numbers and loading extra responsibility onto drivers makes no sense unless you are looking at the bottom line rather than safety.

The move toward DOO is wrapped in language of “modernisation”. On the glossy publicity this is punted as faster, greener, more spacious trains.

And with severe overcrowding on Britain’s train services that can sound appealing for passengers.

But the bosses want to “modernise” workers’ conditions—that means undermining safety.

Transport secretary Chris Grayling argued last December, “Our railways need to adapt and change in order to be able to cope with the growth that they have already experienced and that which lies ahead.”

His Department for Transport has embarked on a voyage to wreck the industry.

But rail workers can save transport if they mutiny and chuck Grayling and his mates overboard.

An independent regulator?

The Rail Safety and Standards Board (RSSB) is often described as “independent” in the press

But members can be “any company playing a part in operating or supporting the British railway system”.

Some 28 passenger train operators are current members, including the owners of Southern, Govia Thameslink Railway (GTR). GTR boss Charles Horton, pictured, is one of ten non-executive directors.

Just three members of the board are described by RSSB as “independent”. RSSB said itself, “We’re owned by the industry.”

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