The RMT found a government-funded train company splashed £75m on dividends – so the Canary dug deeper

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This article was updated at 4:30pm on Thursday 30 March. Angel Trains originally gave the Canary an incorrect response. 

The National Union of Rail, Maritime and Transport Workers (RMT) has exposed dodgy finances in the train industry to the tune of £75m. However, some digging by the Canary has uncovered a further £131m – with some of this money going to offshore tax havens. The culprits are so-called ‘ROSCOs’ (rolling stock leasing companies).

ROSCOs: making a killing

The Office of Road and Rail (ORR), an independent government body, states that:

Rolling stock leasing companies (ROSCOs) own most of the coaches, locomotives and freight wagons on the rails, which they hire out to train and freight operating companies.

ROSCOs have replaced many of the older trains that were being used before privatisation with modern vehicles. They are often responsible for the maintenance and rebuilding of the vehicles they hire out.

The RMT said of ROSCOs:

the government and the taxpayer now pay the ROSCOs directly for the rising cost of leasing trains. In the last five years, the ROSCOS have jacked up the cost of their leases by around 66 per cent so that it now represents around a quarter of TOC spending.

However, these ROSCOs are making a further killing from the public purse via shareholder dividends – as the RMT has revealed about one of them.

Read on...

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RMT: exposing dodgy dividends

The RMT dug into the accounts of ROSCO Angel Trains. It found that its parent company, Jersey-based Willow Topco, paid out £75m in dividends. The RMT found that in September 2021 part of Willow Topco was bought by a new company, which therefore then owned a large part of Angel Trains. Not long after, Willow Topco paid out £75m in dividends to this new company, and its parent one, in the space of just three months.

The Canary asked Angel Trains for comment. A spokesperson told us:

Angel Trains is one of the largest investors in UK rail. We have invested £5 billion in UK rolling stock over the last ten years, helping to modernise the rail network and improve passenger journeys through the introduction of new trains and by refurbishing existing ones.

We invested £53 million in maintenance alone in 2021, which directly supports skilled and semi-skilled jobs across the UK.

We are working hard to support innovation in UK rail. We are self-funding multi-million pound trials in low carbon rail solutions, including hydrogen and battery power. These projects not only support the drive to net zero, but provide an opportunity to reduce the cost of electrifying the rail network as a whole.

Our investments are made with private capital, which remains off the government’s balance sheet, and represent a genuine risk transfer from the public to the private sector.

Widespread practice

Angel Trains’ parent company wasn’t the only ROSCO to pay out dividends. The Canary dug into the issue, and found via published accounts that:

So, if we add the above figures to the £75m at Angel Trains, that means ROSCOs paid out at least £206m in dividends in the past two years – while the pubic paid these companies for providing trains.

Other companies like Rock Rail and Lombard North Central had multiple subsidiaries and holding companies. It was unclear exactly what dividends were paid, if any, and if so from which company the money was extracted.

However, the practice of ROSCOs paying dividends from their huge profits isn’t new. As the website Leasing Life reported, the RMT previously found that in 2020, the three main ROSCOs (Angel, Eversholt, and Porterbrook) paid out nearly £950m in dividends. And overall, between 2012 and 2020, these three companies splashed out over £2.6bn in dividend payments.

RMT: a scandal that needs to stop

RMT general secretary Mick Lynch said of Angel Trains:

Our railways are every day the subject of a shadowy heist pulled by the well-heeled parasites who lease out our trains.

The rolling stock companies continue their shabby dealings untouched by government, shuffling taxpayers’ money out of the railways, through Jersey and in the case of Angel, into the hands of a Canadian pension fund. This is a scandal that gets far too little attention and it’s got to stop

ROSCOs paying out dividends to parent companies is widespread practice. Put simply, dividends are paid out of profits, but the profits are coming from government subsidies – so, that’s your money being skimmed. Unfortunately, this corrupt and shady business clearly won’t stop under the Tories.

Feature image via pxfuel

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