ScotRail given £23m early to cover shortfalls

ScotRail Alliance managing director Alex Hynes. Picture: Jon Savage
ScotRail Alliance managing director Alex Hynes. Picture: Jon Savage
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Cash-strapped ScotRail has been paid £23 million early to cover revenue shortfalls.

It follows Dutch firm Abellio, which runs the train franchise, not achieving an expected increase in ticket sales because of delays and disruption caused by upgrading of the main Edinburgh-Glasgow lijne.

ScotRail has been under huge pressure after its pre-tax losses rocketed from £2.6 million in the 2016 calendar year to £17.9m last year.

Delays in electrifying its premier route put back plans for faster and longer trains.

The firm has also taken longer than expected to recover passenger numbers after accompanying track work which closed the main part of Queen Street station for four months in 2016.

It is also thought to have suffered from worsening punctuality, chiefly caused by extreme weather, and track and signalling problems, which are the responsibility of its Network Rail partners.

The £23m was due to have been paid during the fifth year of the ten-year franchise, in 2019-20.

This has come in addition to £183.4m in subsidy payments during 2018-19.

These fell from £310.7m last year and are due to reduce further next year.

At a Holyrood committee today, ScotRail Alliance managing director Alex Hynes only admitted receiving the advance after repeated questioning from MSPs.

He said: "It's true to say that ScotRail has received some revenue support payments, which it is contractually due from April next year in advance of April next year.

"But that does not change the net amount of taxpayer subsidy to the franchise and it's worth saying that these commercial discussions happen all the time between ScotRail and the Scottish Government and those changes are just one of the changes we discuss at regular intervals with Transport Scotland officials."

The admission followed rural economy and connectivity committee convener Edward Mountain intervening after Conservative Jamie Greene and Liberal Democrat Mike Rumbles had tried to quiz Mr Hynes on the issue.

Mr Hynes told Mr Greene: "Abellio ScotRail has not received any money from the Scottish Government that is not due."

He then told Mr Rumbles: "Subsidy payments are adjusted all the time...including the phasing."

The Scottish Government said the amount brought forward was £23 million.

A spokeswoman said: “Any notion ScotRail is receiving additional money is wrong - this commercial arrangement presents no additional costs to taxpayers other than those than contractually obliged.

“The re-phasing, less than 10 per cent of the total due in year five, is appropriate under the terms of this contract, which is vital to the fabric of Scotland’s transport network.

"The re-phasing reflects the delays in revenue growth caused by the late delivery of Network Rail electrification, as well as the extended impact of the Queen Street tunnel closure period.”

A ScotRail spokesperson said: “No extra money has been received.

"Payment has been brought forward and will be reduced over time in accordance with the original franchise agreement.”

THE EXCHANGE IN FULL:

Alex Hynes to Mike Rumbles: "The subsidy payments, which are between ScotRail and Transport Scotland, are adjusted all the time to reflect changes in the contract.

"These commercial discussions happen all the time and that includes the phasing of subsidy.

"But it's not true to say that ScotRail's received anything that it hasn't been due under the terms of the franchise agreement."

Mr Rumbles: "You seem to be evading answering this question, if I may say so, on the grounds of commercial confidentiality.

"It's a very simple question - Jamie Greene tried to pursue it and didn't, from my perspective, get a clear answer, I'm trying to pursue this, so just let me get it clear - has ScotRail received taxpayers' money that it is due, but before it is due?

"Yes or no?"

Mr Hynes: "We have had discussions with the Scottish Government around the phasing of subsidy payments, yes."

Committee convener Edward Mountain: "I think you're going to have to answer the question because you're being pushed quite clearly on this.

"There must be a date that the subsidy is normally paid, that would be the due date.

"What you are being asked, and have been asked by two committee members, is have you received that money in advance of the due date?

"To me, it's a simple yes or no answer and it would be helpful to end this line of questioning and move on, but we can't do it until you give me a yes or no answer.

"So have you received a payment in advance of the due date?"

Mr Hynes: "It's true to say that ScotRail has received some revenue support payments, which it is contractually due from April next year in advance of April next year.

"But that does not change the net amount of taxpayer subsidy to the franchise and it's worth saying that these commercial discussions happen all the time between ScotRail and the Scottish Government and those changes are just one of the changes we discuss at regular intervals with Transport Scotland officials."