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Orr: Network Rail Debt Heading For £50Bn

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From £20bn today to £50bn by 2020, excluding the cost of HS2.

Another hidden deficit exploding exponentially.

http://www.guardian....-debts-watchdog

Network Rail debts could climb to £50bn by 2020, says watchdog

Gwyn Topham, transport correspondent The Guardian, Monday 15 July 2013

The government has been warned that Britain's railways are on the edge of a funding crisis as the industry regulator predicts that Network Rail will amass debts approaching £50bn by the end of the decade.In a report issued on Monday , the Office of Rail Regulation (ORR) says Network Rail's interest payments will consume a third of its budget by 2029. The watchdog calls for more transparency on rail funding so that the public can understand the true costs.

Alongside direct government funding of around £3.7bn a year, investment in the railways is being paid for by borrowing underwritten by the state. Network Rail's net debt increased by £3.1bn in 2012-13, when it paid out £1.4bn in interest. According to the ORR's projections, by 2020 its debt will have jumped from around £20bn to almost £50bn.

Repayment is guaranteed by the government, meaning Network Rail has been able to borrow on the same credit rating as the state. But the ORR says its ability to service its debt and to raise additional finance will depend on future direct government support and creditors' confidence. It adds: "The burden on future generations to pay for the costs of historic investment will continue to rise as Network Rail's debt grows."

The growing liabilities the ORR identifies exclude the £42.6bn earmarked for the HS2 high-speed track, a total that was increased by £10bn last month.

Senior figures at Network Rail acknowledge that the debt poses a problem but few in the industry wish to draw attention to the "hidden deficit" being run up for rail investment at a time when the coalition is pursuing deficit reduction.

Tony Travers, the LSE professor and leading public finance expert, said: "There's a real, fast-growing problem for the government here. The scale of the indebtedness is already perplexing. At some point the debt will damage [Network Rail]. Over time there will be less money available for the maintenance of the railway – or the government will have to pay off the debt."

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From £20bn today to £50bn by 2020, excluding the cost of HS2.

Another hidden deficit exploding exponentially.

"Could" increase.

Better introduce a "carriage tax." :ph34r:

Edited by Secure Tenant

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Trains seem fairly expensive and very full - why is there a funding short-fall? At the risk of seeming stupid, how does a service running at capacity make such a loss unless the finances were structured as such that it was impossible to break even?

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Trains seem fairly expensive and very full - why is there a funding short-fall? At the risk of seeming stupid, how does a service running at capacity make such a loss unless the finances were structured as such that it was impossible to break even?

there was an article on this some years ago...why were train leases so expensive...something to do with risk...yet the payer was the Government,....the safest payer there is....yet still they were paying much higher lease rates than normal....

i suspect much the same is going on today....prolly due to the "cost" of ensuring all this debt is Off Balance Sheet.

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Trains seem fairly expensive and very full - why is there a funding short-fall? At the risk of seeming stupid, how does a service running at capacity make such a loss unless the finances were structured as such that it was impossible to break even?

From the outset of privatisation (and failure) the outsourcing of everything has cost exponentially++ of what the previous nationalised rail network did. 100's of engineering companies all charging what they like, 1000's of 'consultants' each claiming 100's per hour for everything, no doubt choosing the toiltet paper required a consultancy lasting a year or two. this is crony capitalism at its best, extracting cash from the public purse and private enterprise (the rail companies, however are also set up the same way). And naturally the bankers have their *****'es in the soup also.

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  • 242 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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