The UK government is facing renewed pressure to end the outsourcing of key railway services after a union analysis revealed that six major private contractors made combined profits of around £150 million last year.
The Outsourcing Profit Margin
Research commissioned by the National Union of Rail, Maritime and Transport Workers (RMT) has cast a spotlight on the financial gains of facilities management companies operating across the national rail network and London Underground. The study focused on six prominent suppliers: Mitie, OCS, Bidvest Noonan, Churchill, Carlisle Support Services, and ABM.
The analysis estimates that these firms achieved average profit margins of 11% on their contracts, aggregating to a total profit of approximately £152 million in the past year. The RMT argues this money could be reinvested directly into railway staff and services for passengers.
A 'Protected' Profit Model at Taxpayer Expense?
The union has sharply criticised the contractual structures common in the sector. It claims many agreements contain clauses that pass additional costs—such as rises in the National Living Wage or increases in employers' National Insurance contributions—back to the government. The RMT contends this effectively means "the outsourcing firms’ profits are protected at the expense of the taxpayer."
The report also highlighted substantial executive pay. Mitie, for instance, paid its chief executive, Phil Bentley, £20.5 million over the past two years. Furthermore, it noted that one contractor, Carlisle Support Services, is ultimately owned by the former Conservative peer, party donor, and tax exile Michael Ashcroft.
Political and Ministerial Responses
The issue sits at the heart of a broader political debate about public service provision. Before the 2024 election, Labour pledged to launch "the biggest wave of insourcing of public services in a generation." While the party's plans for Great British Railways (GBR) involve nationalising passenger train operations, the future of outsourced support roles remains less clear.
Rail Minister Peter Hendy acknowledged the complexity, stating the railway is "absolutely stuffed full of big and small contracts, all with different terms." He expressed a desire for a fresh approach, saying he would support GBR in making real choices about what is best for customers, "including whether things are best outsourced or not." He urged management to "think afresh" about how to serve passengers best, acknowledging the unions had made "some interesting points."
In contrast, a spokesperson for Carlisle Support Services pointed to stability in its annual report, noting it is widely accepted that supply chains will remain in place for the foreseeable future despite changes to train operating company contracts.
The Union's Call to Action
RMT General Secretary Eddie Dempsey branded outsourcing on the railways a "racket that needs to be brought to an end." He stated that since 2016, contractors have siphoned over £1.6 billion out of the network. "This is money meant for staff and services to benefit passengers, not to line the pockets of hedge funds and private equity firms," Dempsey said, accusing the firms of suppressing wages and shifting costs onto the public purse.
He described the creation of GBR as a "historic opportunity" and called on the Labour government to fulfil its manifesto commitments by launching a major insourcing programme across rail.
Contractors defended their roles. A Mitie spokesperson said the company was "proud to support the UK’s rail network" by providing essential services safely and efficiently, delivering value for taxpayers. ABM disputed the RMT's figures but stated it was committed to a collaborative relationship, praising its team's vital role in keeping the London Underground clean. OCS, Bidvest Noonan, and Churchill were approached for comment.
