Network Rail, which is trying to ward off national rail strikes and is under fire for causing passenger chaos during engineering works, has seen its profits halve from £1.035 billion to £506 million over the past year.
The not-for-profit company, which runs Britain’s railway lines, blamed the dramatic drop in pre-tax profits on the rail regulator’s decision to slash its income for this and the next four years.
Network Rail’s income was £246 million lower than last year, which led to lower operating profits.
It has also been hit by new accounting rules that have turned some of its financial engineering into non-cash losses, although these have no impact on what it can spend on the railway.
Network Rail’s debt also widened considerably from £33 billion to £37.8 billion, a sum which has been moved on to the Government’s balance sheet, following the company’s reclassification as a public body last year by the European Union.
The rail group, which has been criticised for widespread disruption to passengers in recent months, said it is investing £100 million a week to upgrade the country’s railways.
Patrick Butcher, finance director at Network Rail, said: “With more than a million more trains on the network than 10 years ago, there are inevitable challenges. We are determined to do more to improve and action is being taken to quicken the pace of change.”
The Office of Rail Regulation has begun an investigation into failings at the track operator, raising the threat of hefty fines.
Spending on the railways is double what it was five years ago and includes £2.9 billion a year on replacing track and infrastructure.
Despite the disruption caused by works at two of the capital’s biggest stations, London Bridge and Victoria, the total number of rail passengers in the year grew by 67.3 million, hitting a record for modern times of 1.65 billion a year.
Network Rail said this was one of the reasons it was not hitting its punctuality targets.
