The Office of Rail and Road has revealed that railway earnings were up last year, further reducing the level of subsidies paid by government. However, there is still some way to go before the level of government support falls back to the levels achieved before Covid.

The news has come as Chanceller Rachel Reeves is about to confirm in her Budget statement today that regulated fares charged by nationalised English operators or those with DfT contracts will be frozen for the coming year.

The ORR said fares income increased by 8.3 per cent in the year from April 2024 to March 2025 to £11.5 billion, reflecting a continued recovery in journeys since the pandemic.

Government funding (including contributions from the devolved administrations in Cardiff and Glasgow) of the operational rail industry was down by 7 per cent, to £11.9 billion, but that was still nearly half of the industry’s costs of £26 billion.

This amount includes £2.5 billion in interest paid on loans by Network Rail, although this was down by 5.5 per cent because the payments are linked to inflation, which was lower than in the previous year. The governments’ total contribution of £21.6 billion also includes capital costs, such as Network Rail renewals and the continuing expenditure on HS2, which was £7.1 billion.

The ORR’s director of economics, finance and markets Will Godfrey said: ‘Taking stock of the national rail finances in our annual report, we welcome the continued recovery in fares income in the last year. But cost pressures and a lagged recovery in industry income compared to passenger journeys, explains why the reduction in government funding still leaves the overall subsidy substantially above pre-pandemic levels.’

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