As it’s revealed Merseyrail could come under full public control from July 2028, analysis shows that under the current franchise agreement shareholders have already pocketed £245m – £70m in the last two years alone. Tony McDonough reports
Since the start of the current Merseyrail franchise agreement in 2003 shareholders have benefited to the tune of £245m, new analysis shows.
LBN looked at Merseyrail’s annual accounts for each of the years since the current 25-year concession began. In the first year of operation shareholders pocketed a modest £1.4m. However, over the last two years alone they have bagged £70m.
These figures are revealed as Liverpool City Region Combined Authority (CA) considers options for what happens at the end of the franchise in July 2028. Options include a five-year extension to the current agreement, a new franchise or full public control of the network.
There is a view within the CA, which has already invested £500m into 52 new trains, that a publicly-owned and operated rail network could offer a “strong opportunity” to improve integration across transport modes and enhance services for passengers.
Metro Mayor Steve Rotheram said: “As we look ahead to the future of the Merseyrail concession beyond 2028, it has been vital that we undertook a thorough and robust assessment of the options to ensure any new operating model delivers the very best value for passengers.”
Known as Merseyrail Electrics 2002, the company has two shareholders – Serco Group and Transport UK. The latter business was created in August 2022 following a UK-led management buyout of Abellio, the overseas division of Netherlands Railways.
Over more than two decades of the concession shareholder payouts have averaged more than £11m a year. Highest payout was £42m for the 12 months to January 6, 2024, when Merseyrail reported record pre-tax profits of just under £44m.
However, this figure was boosted by a one-off payment of £15m following underpayments in previous years. The CA disputed the figures provided by Merseyrail but an independent arbitrator came down on the side of the private operator.
In the most recent set of accounts, for the 12 months to January 4, 2025, Merseyrail reported pre-tax profits of £31.2m and paid out £28m to its shareholders.
There has only been one year when Merseyrail did not pay any dividends to shareholders. That was for the period covering the COVID pandemic when passenger numbers plummeted for long periods.
Although the private operators are entitled to these payouts under the franchise agreement, critics of the current system would say that £245m could have been better reinvested back into the network.
In a separate move Mr Rotheram is also looking to take control of the network infrastructure comprising track, signalling and stations. These are currently under the control of the Government-owned Network Rail.
This would not only give the CA great control over both trains and track it would also potentially offer access to adjacent land that could be utilised for property development.
A report being put before the CA on Friday, March 6, summarises the work completed so far on examining the various options for when the Merseyrail franchise ends.
It is being recommended that a full and detailed assessment of the options for bringing the Merseyrail operation under public control is undertaken together with a plan setting out the steps required to deliver that. A further report will be submitted to the CA when the assessment is complete.
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Mr Rotheram also said: “My ambition for our transport network has always been to simply build a system that’s fully integrated, accessible to all, and as affordable as possible for passengers.
“Since I was elected, passengers have been at the heart of every decision the Combined Authority I lead has taken – from bringing our buses back under local control, to investing £26m in a new Mersey Ferry, rolling out contactless ticketing across the network, expanding active travel routes and progressing significant rail improvements.”