NAO highlights baffling rail sector finances


The complexity of the current structure of the rail industry in England makes it difficult for MPs and the public to understand where public money is going, the National Audit Office (NAO) has said.

The public spending watchdog has published a financial overview of the rail system in England, setting out ‘how much it costs, how it is paid for and some of the challenges ahead’.


The document looks at spending and income from the five financial years ending in March 2020, based on information published by regulator the Office of Rail and Road, Network Rail and the audited accounts.

For example, it shows a breakdown of the £17.4bn total spending of the rail system in England in 2019-20. This included:

  • £9.5bn on operating rail passenger services;
  • £7.1 bn on operating rail network infrastructure; and
  • £0.9 bn on operating freight services and High Speed 1 (HS1).

During the same financial year, which was only partially affected by the pandemic, total rail sector income was £17.1bn, of which £5.1bn was government funding.

The remaining £12bn was earned income, the majority (£9.6bn) of which was earned through passenger fares. The NAO pointed out that these proportions changed with the onset of the pandemic in March 2020.

It said: ‘The arrangements for delivering rail services in England are complex, and distributed across the public and private sector. This makes it difficult for Parliament and taxpayers to understand the overall financial position, to which the taxpayer is ultimately exposed, and the impact of government's choices.’

The NAO said its overview ‘aims to enhance clarity at a moment of significant industry change’ with the recommendations of the Williams Review expected to address longstanding issues within the system and being published in a context of heightened uncertainty about the future demand for rail.

It added: ‘There are a number of significant challenges for government to address, including managing costs to taxpayers and rail's contribution to the government's net zero target for carbon emissions.’

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