EIGHT of Britain's private rail companies, including ScotRail, will make large profits during their franchise, according to a new report published yesterday.

However, the report, which was commissioned by the pressure group Save Our Railways, warned that five of the train operating companies - including three running busy commuter routes - would make heavy losses, which would hit jobs and could even result in them abandoning their franchises.

The companies which are expected to make big profits, whether revenue increases by up to 3% or decreases by up to 1%, include ScotRail and South West Trains, which is run by Scottish company Stagecoach.

The others are: Great Western; Great North Eastern (formerly East Coast Main Line); Gatwick Express; Connex South Central; Midland Main Line; and LTS (London Tilbury and Southend).

The report estimated that the seven English-based companies' combined profits would be between #600m and #1930m during the first seven years of their franchise.

It stated that ScotRail would make a #43m profit if revenue per annum remained at current levels and could make a profit of #146m if revenue increased by 3%.

InterCity West Coast, added the report, would make a profit of #277m if revenue increased by 3% or #62m if revenue remained at current levels.

However, it is not included in the list of companies expected to make large profits because SOR expects it to make a #3.6m loss if revenue decreases by 1%.

The lines which SOR says are under threat are Thameslink, Thames Trains, West Anglia and Great Northern, Cardiff Railways, and South Wales and West.

The report stated that these franchises could require between #250m and #1530m in extra Government subsidy.

In addition, five other lines faced running into financial difficulties - Chiltern, CrossCountry, Regional Railways North West, North London Railways and the Isle of Wight's Island Line.

The report stated that some franchises ''appear to have been let on far too easy terms while others have been let on far too difficult terms''.

It added that, at present, it was ''not possible to determine with any certainty whether, in the long term, the cost to the taxpayer of providing rail services will go up or down as a result of the franchised railway''.

SOR national secretary Keith Bill said yesterday that the report was ''truly shocking news'' for passengers.

''There has been concern in the rail industry for some time about the way that some of the later franchises were let to bidders who were taking a gamble.''

The report, entitled The Prospects for the Franchised Railway, made it clear that the then Franchising Director Roger Salmon had written to the Government in May 1995 suggesting abnormally high profits should be recycled for the benefit of taxpayers and passengers.

The Government rejected the proposal and Mr Bill said yesterday that ''Mr Major's refusal to countenance the suggestion will cost the nation dear''.

He added: ''We will see some companies making enormous profits and others running into grave difficulties and heavy losses which could result in major service cuts in many parts of the country unless millions of pounds of extra subsidy are found.''

As bidding for franchises got more intense, people had to promise more to win the franchise and some operators would need to increase revenue and reduce costs by only 4% to break even, while the figure for other operators was as high as 20%.

SOR co-ordinator Jonathan Bray said: ''We are in a mess with rail privatisation and mainly because of the speed with which the Government forced it through. Of the later franchises, many were let on an unrealistic basis.''

Troubled South West Trains, owned by Perth-based Stagecoach, faces a #1m penalty unless services improve in April.

Mr Bill said: ''Passengers using South West Trains will be amazed to learn that while Stagecoach is getting rid of drivers and cutting services, it will be making huge profits - possibly as much as #500m.''

A spokesman for ScotRail dismissed the report as speculative and declined, for reasons of confidentiality, to say if its estimates were similar to the company's.

However, Mr Mike Berry, an administrator for the RMT trade union in Scotland, endorsed the report and said it was the case that train operating companies were going to be ''desperately short of money, if not for the first period of the franchise, for the later stages''.

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