train at ryde pier

Island Line: Finney / Pugh exchange: Does Gov subsidise? #2

Earlier in the week OnTheWight ran the first in series of email exchanges between Nick Finney, Isle of Wight Conservative MP Andrew Turner‘s transport advisor, and David Pugh, who is connected with the Keep Island Line in Franchise (KILF) group.

The Island Line franchise is a complex subject, so we feel that it’s only right that the exchanges are published unedited, so details are not missed out.

Here’s the second exchange that took place earlier this week. The email is from Nick Finney to David Pugh in response to his first email.


At the risk of boring every one to tears, let’s deal with a few of the outstanding issues on the Island Line not just the issue of subsidy but all the other matters that are troubling the Trade Unions and Labour about the future of the Island Line.

First the argument about subsidy and losses incurred by Island line.

My comments about your failure to understand the nature of subsidy and it’s relevance to the current situation faced by the Island Line is borne out by reference to the Stagecoach Annual report and accounts for 2014. On page 78, we find the first financial reference to revenue support payments from the Government to South West Trains ie, a subsidy, of £301.3 million for 2014.

Earlier on page 19 we find the following Statement

“Revenue growth”

“The Group’s two wholly owned rail franchises South West Trains and East Midlands trains continue to receive revenue support which partly offsets the extent to which actual revenue falls short of the revenue that was forecast as part of the bids for the Franchises. As a result of the revenue support arrangements, the profit of our UK rail division is less sensitive to changes in revenue than it would otherwise be.”

If we move on to note 3 of the accounts dealing with the consolidated financial statements we find that Rail Revenue support for SWT amounted to £256.4 million in 2013 and rose to £301.3 million in 2014.

A note to the accounts explains again “Rail revenue support is the amount of additional financial support receivable from the UK’s DfT in certain circumstances where a train operating company’s revenue is below target”.

David. I think this comprehensively confirms the accuracy of my statement on IOW radio which you derided and an apology would be appropriate.

NEXT we go to the issue of Island Line annual losses. Rail magazine wrote an article which they published on the 14th September 2014 on the Great Wight Island Line to celebrate its 150th Anniversary. It’s a most interesting article freely available but I want to quote from Andy Naylor, SWT’s Head of Customer services and the Island Line who on record said,

“The challenges we face are both operational and financial. On the operational front, we are dealing with an ageing infrastructure and rolling stock that requires constant maintenance to ensure reliability. On the financial side, it is no secret that Island Line’s operational costs far exceed its revenue turnover by more than £3,500,000 each year.”

Perhaps you and Charlotte Hofton (who for some reason appears to think you may be an expert on rail financing) would like to apologise for their abusive treatment of Andrew’s statement about losses. If you and she had done your research professionally, you would have been forced to acknowledge the truth.

And just to lay to rest that the South West franchise returns exceptional profits that would support losses on the Island line, the same Stagecoach accounts show at para 2.5.4 that the operating margin is a paltry 2.7%.

There is much more to the issues regarding the future of the Island line than can be contained in this one email. More will follow.

Andrew Turner is fully appraised of the difficulties of finding the best way forward to keep the service running and indeed improve it. Your cynical attacks on him and your quite obvious failure to understand the complexity of the rail franchise system simply holds back the Island and shunts us into a siding when what is needed is informed leadership to create a new and better public transport system for the Island. That is why a Taskforce is needed – to stop amateurs like yourself misusing data.

You have been opportunistic in attaching yourself to a populist cause without using your intelligence to recognise that the Island has to adjust to the times. We have a Conservative Government which is seeking to “balance the books ” and which, as a consequence, is committed to reduce transport subsidies and improve efficiency. In such circumstances, one has to work harder to achieve a radical investment programme to modernise infrastructure and services than simply bleat that there is no other solution than one which sees the taxpayer subsidising inefficiency and outdated operational models.

You have worked with Andrew’s political opponents to lead ordinary people, who simply want to keep a service, into a cul-de-sac to try to demonstrate that you have a political future. In following this course of action, you are misleading Islanders, as Andrew, assisted by me will demonstrate over the coming weeks.

If you truly aspire to become a local Councillor again, stop your obsessive campaign against everything that Andrew Turner MP seeks to do for the Island. You lost your election. He won his despite all you did to try to discredit him and then advising people to vote for UKIP. You have chosen the wrong issue to try to achieve your rehabilitation into political relevance.

Warmest regards Nicholas


David Pugh’s response to this email to follow.

Image: bods under CC BY 2.0