Profits and investment

Tim Worstall: The Rolling Stock Leasing Companies


"Perhaps it would be better to have lengthened the trains. Question: are there any more carriages around to add to the trains? I spotted yesterday (not sure where) a point that no, in fact there are not any more trains. All the rolling stock in the country is currently in full use. Which means that someone has to go out and buy some more: those leasing companies. Who are, it seems, not allowed to make profits on the stock that they do buy."

but...

"The Department of Transport, run by the Brownite Douglas Alexander, has called on the Office of Rail Regulation to investigate the three rolling stock companies for making excessive profits with a view to referring the matter to the Competition Commission. These are the businesses that own and lease the country's trains used by the various regional operating companies. The banks that own them are livid and they have good reason. The leases are commercial agreements between private companies. But they have also, at every stage since privatisation, been subject to government scrutiny. They're as much the Government's leases as anybody's. The three rolling stock companies make a combined profit of up to £165m, having sunk £6bn into new trains since 1998".