11 July 2025
The future of Merseyrail: Public ownership or private rip off?
Which future for Merseyrail?
Merseyrail’s 25-year Concession is now nearing its end and the Combined Authority must decide whether it will extends the franchise, re-tender or, as with the rest of the national rail network, bring it into public ownership.
Merseyrail’s operators – Transport UK and Serco - are currently arguing that they should be allowed to continue to operate the Concession in the Liverpool City Region.
RMT does not believe this is in the best interests of the people of the region, or the British taxpayer.
Public investment in good services:
Merseyrail’s operators like to take credit for its good performance. What they neglect to emphasise is that this is largely a consequence of public investment.
1. The new Class 777 rolling stock was bought and is owned by the Combined Authority using public investment.
2. The £80 million investment in the new Headbolt Lane Station was provided by the government’s Transforming Cities Fund.1
3. The £19.5 million projects to make 80% of the city region’s stations step-free accessible are being funded by the City Region through the government’s City Region Sustainable Transport Settlements and £9.5 million from the government’s Access for All funding.2
None of these investments were made by Merseyrail. In fact, far from investing in better services, Merseyrail has been an exercise in parasitic extraction of value since the concession began.
1 https://www.gov.uk/government/news/government-joins-forces-with-liverpool-to-transform-citysrail-network
2 https://www.liverpoolcityregion-ca.gov.uk/news/liverpool-city-region-on-track-to-have-mostaccessible-train-network-in-the-country-as-mayor-announces-19m-investment
Parasitic value extraction:
The Merseyrail Electrics joint venture has paid out an eyewatering £212 million in dividends since 2003 to their shareholders, averaging 105% of their profits over the period of the contract. That is an average of £10 million that leaves the service each year.3
Merseyrail profits and dividends
£45,000,000
£40,000,000
£35,000,000
£30,000,000
£25,000,000
£20,000,000
£15,000,000
£10,000,000
£5,000,000
£-
£(5,000,000)
Merseyrail Electrics 2002 Limited Profit for the year after taxation
Merseyrail Electrics 2002 Limited Dividend
Merseyrail recorded 28.3 million passenger journeys last year. That represents 1.7% of total passenger journeys in Britain last year.4
In the same year, it paid out a dividend to shareholders of £43.8 million, representing 25% of total UK private operators’ dividend payments5 .
That’s the equivalent of its shareholders getting £1.52 every time a passenger uses a Merseyrail service.
Such profits might in theory be justifiable if Merseyrail was risking large amounts of its capital in investing in the service. But as we’ve seen, investment is being provided by the public and the British taxpayer. In fact, Merseyrail takes no risks with its own capital to justify such grotesque dividend extraction.
As the rail minister noted in parliament recently, rail privatisation in general has been a risk-free business for private operators:
‘examplesofprivateinvestmentinourrailwayinfrastructurehavebeenfairlythin onthegroundintheprivatisationera…. even100%privatesectorownershipof trainoperatingcompaniesunderfranchisinghasnotresultedinlargeinvestments
3 RMT analysis of Merseyrail Electrics 2002 Ltd accounts.
4 https://dataportal.orr.gov.uk/media/uc5hoi5h/merseyrail-2023-24.pdf
5 https://dataportal.orr.gov.uk/statistics/finance/rail-industry-finance/table-7226-franchised-passenger-trainoperator-finances-since-2015-16-by-franchise/
If rail privatisation has been generally parasitic, it is nevertheless the case that Merseyrail is an especially egregious example. We can see this by measuring its Return on Capital Employed (ROCE).
While the average ROCE in the national rail industry was around 120% over the course of privatisation (which is a very high return of profits to capital invested compared with other industries) Merseyrail’s is 182%. That is a staggering return on almost no risk.7
Summary:
In summary, if the Merseyrail franchise has performed well, that is largely down to the extensive public investment in the service and, not least, the control and attention of the Combined Authority, driving improvements for passengers.
That means that it is predominantly the City Region and British taxpayer that has subsidised Merseyrail’s performance and enabled its profiteering.
Merseyrail’s private operator has made unjustifiable profits from this concession and huge amounts of money that could have been used to invest in the local service have been siphoned out into the bank accounts of Transport UK and Serco’s owners.
This should be called what is, a licenced rip off-of passengers and public by private interests.
Across the rest of Britain, the reign of parasitic private operators is being put to an end by the government, which recognises that the people of Britain deserve better. Why should the people of the Liverpool City Region not have the same improvements?
It is time that the rip-off was put to an end for good and the Combined Authority was able to run the services directly, ensuring that every penny of Merseyrail’s revenue went to support transport services in the City Region.
6 https://hansard.parliament.uk/Lords/2024-10-21/debates/BC4AFD1E-7157-4348-8A9067B8BD53860C/PassengerRailwayServices(PublicOwnership)Bill?highlight=privatisation#contribution44E78A7F-FE9D-46CA-958C-526014C681C0
7 RMT analysis of Merseyrail Electrics 2002 Ltd accounts.