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ORR inquiry into delay pay-outs by rail firms

10 May 2012

Rail regulators are to launch an inquiry into excessive profiteering by rail firms after allegations that they have pocketed tens of millions of pounds due to passengers for delayed and cancelled trains.

The ORR inquiry follows last week's disclosures by the TSSA rail union that less than 10% of the £184 million paid out to the private operators last year by Network Rail ever found its way back to frustrated passengers.

It revealed unpublished DfT figures showing each of the 23 operating companies only paid an average £650,000 to passengers last year-less than £15 million overall.

An ORR spokesman confirmed the inquiry in a statement to the union which said:

"The ORR plans to investigate consumer awareness of current refund rights and compensation arrangements and the extent to which consumers exercise their rights. We will publish a report of our findings together with our recommendations later in the year."

Manuel Cortes, leader of the TSSA rail union, welcomed the inquiry into what he called the "cosy cartel between NR and the rail firms funded by the taxpayer".

"The present compensation scheme is little more than licensed larceny by the private train operators. The passenger gets mugged twice, first when his or her train is delayed and secondly when he then has to pay the train firm compensation for that delay via taxpayer funded Network Rail.

"But when he tries to get his money back, he is told the train has to be two hours late to get a full refund. Rail firms get compensation when a train is more than five minutes late. This is a rigged system which operates behind closed doors in Whitehall. We want to see transparency, how much the private firms get from NR and then how much they pay the passenger.

"Those figures should match. At present there is a yawning chasm which only benefits shareholders, not passengers."

The union launched its own inquiry after both NR and ATOC stonewalled the Commons Transport Select Committee last year into exactly how much was paid out each year to the individual rail firms for delays and then how much passengers subsequently received.

An emergency motion will go before its annual conference in Cardiff next week asking Ministers to scrap the existing compensation formula for the firms which does not pay them for lost business on the day but allows them to estimate future lost business.

"This is a green light for the firms to print money at the taxpayers expense," added the general secretary.

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