RMT exposes yet more dodgy rail company dividends – then, the Canary finds even more
The National Union of Rail, Maritime and Transport Workers (RMT) has once again exposed rail companies siphoning off huge dividend payments to their subsidiaries. The payments, worth £82m, were paid while the Conservative government was subsidising them with public money. The revelations come after the RMT and Canary previously exposed over £200m in dividends paid out by rolling stock companies. So, we dug into the issue once again – and found yet more train operators paying out dividends.
RMT: exposing the rail companies again
The RMT has uncovered that the government signed off on two rail companies paying out dividends. As it wrote:
FirstRail Holdings Ltd, the holding company for five FirstGroup franchises, and Govia Thameslink Railways, which runs the biggest franchise in Britain, have recently reported dividend payments of £65 million and £16.9 million respectively in their annual accounts for 2022.
However, both companies did this while at the centre of controversy – including poor performance, industrial disputes, and in the case of Govia, the government stripping its sister company of one of its contracts:
The @RMTunion has today revealed that the Transport Secretary allowed two private rail firms to pay £82 MILLION in dividends in 2022 – despite huge failings including cancelling 100s of services.
We need rail back in public ownership, not acting as a cash cow for speculators.
— Richard Burgon MP (@RichardBurgon) April 18, 2023
Moreover, the government has also been paying the two companies out of the public purse. This was to cover losses due to strikes by workers. This is without the standard subsidies the government gives them. Plus, it has also refused to release details of exactly how it comes to the decision to let rail companies pay dividends. Overall, the whole thing reeks of corporate capitalist cronyism – as the RMT tweeted:
The rewards of failure: ⬇️💷
Government signs off £65m payout for owners of failing Avanti and Transpennine rail https://t.co/fPe271DqLZ
— RMT (@RMTunion) April 18, 2023
So, what of other rail companies?
More dividends and tax-reduction scheming
Once again, the Canary dug into another rail company’s accounts. Abellio operates government franchises in East Anglia and the Midlands, as well as else where. It benefits from a deal where the government will bung it cash in the event of strikes. However, one of its parent companies paid £8.6m out in one dividend. This was in 2021. It is not clear where the company paid this money to – although given it was one payment, it was likely to a subsidiary company.
Moreover, all this stinks of these private companies being creative with their accounting.
FirstRail Holdings specifically paid out its £65m in dividends via sending it to FirstGroup plc, its parent company. It’s likely it did this to reduce its corporation tax bill. As the website Optimise noted:
A dividend distribution from one company (subsidiary) to the holding company will be free from corporation tax.
The same applies to subsidiaries sending dividends to parent companies. So, public money is propping up rail companies. They then pay out dividends, often to subsidiaries or parent companies. In turn, they end up paying less tax. So, effectively we’re all paying for train companies to pay less tax.
Spiv culture, Tory style
RMT general secretary Mick Lynch said of the dividend payments:
The DfT [Department for Transport] is now little more than a representative of big business, geared to turning tax revenue into shareholder dividends.
If you’re a private train operator, it doesn’t matter whether your problem is unpredictable passenger revenue, costly train leases or industrial action, the Secretary of State is there to help, opening the public purse and emptying it into shareholder’s pockets…
It is clear that only full public ownership of train operation in this country can save our railways from being looted by this gang of unaccountable spivs.
Of course, the Tory government is fine with letting private companies pay less tax, while lining theirs and their shareholders’ pockets. Meanwhile, it’s workers that suffer terrible pay, and the rest of us that are faced with the effects of a broken transport system.
Featured image via Matt Buck – Flickr, resized to 770×403 pixels under licence CC BY-SA 2.0
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