Tuesday 5th November marked a sad day – the 20th Anniversary of the Act that privatised our railways.
That’s 20 years of privatisation that has failed on all of its promises. Fares have rocketed, public subsidy more than doubled and, despite all the hype and promise, there has been little in the way of new private investment.
Instead we have a fragmented, complex and dysfunctional rail system that increases costs, confuses passengers and remains reliant on taxpayer funding.
At the same time, the private groups (and in some cases foreign governments) that own your train operating companies continue to earn huge returns on minimal investment, profits that would simply not exist were it not for public subsidy, profits which should be channeled back into better service, capital investment and lower fares.
As Aditya Chakrabortty writes in the Guardian, rail privatisation has been little more than legalized larceny. The Centre for Research on Socio-Cultural Change (Cresc) was asked to calculate how much companies such as Virgin and First Group are investing in their services.
‘They looked at their return on capital employed, which is to say the amount train operators made on the money tied up in their business. A low ratio would indicate an industry. . . . ploughing cash into delivering a better service. A really high ratio would indicate the opposite: barely any cash going in.
The figures are astonishing. In the financial year ending in March 2012, the train companies gained an average return of 147% on every pound they put into their business. Forget about high: that is stratospheric. It suggests that – despite all the promises made by the freshly rehabilitated John Major – the train operators are investing barely anything, but making bumper returns.’
It doesn’t have to be like this
Publicly owned railways in Europe cost less to run with lower fares. And every penny made on the railways gets reinvested for the benefit of passengers and taxpayers, not shareholders.
Action for Rail’s research shows that £1.2bn a year is squandered through the fragmentation, inefficiency and cash leaking out of the service in the form of profits and dividends as a result of rail privatisation. That’s enough to fund an 18% cut in fares.
Public ownership of Britain’s railways could mean lower fares and your money invested in staff and services.
That’s good for passengers and taxpayers but also our economy and our environment.
It doesn’t have to be like this – and here’s the proof.
Since 2009, the East Coast Main Line has been in public ownership, after two previous private train operators were forced to bail out on the franchise due to financial difficulties.
Directly Operated Railways (DOR) on East Coast has been a success. They have received record levels of customer satisfaction on the line and have out-performed the previous franchise holders as well as private operators on other lines like Virgin on West Coast.
Not only that but DOR on East Coast receives the lowest subsidy of any operator and returns more money back to the state than any other train operator. By the end of this financial year it would have returned £800m to the taxpayer, all of which will be re-invested in the service, instead of going into the pockets of company shareholders.
East Coast shows that publicly owned and operated rail can be a success in the UK. It is a model for the rest to follow.
Despite this, the government wants to sell East Coast off to another private train operator. And they are in a hurry, aiming to privatise the service by October 2014.
This sell off is unnecessary, financially irresponsible and motivated by a blind faith in the false economy of rail privatisation.
We need to stop it.
Action for Rail will be campaigning with a whole range of partners to fight the government’s plans.
WHAT CAN YOU DO?
Write to your MP
Email your MP – ask them to call on the government to put a halt to this privatisation and show their support by signing Sheila Gilmore MP’s Early Day Motion
‘That this House notes that rail services on the East Coast Main Line have been publicly run by East Coast since November 2009; congratulates East Coast management and staff for improving services; welcomes the £640 million in profits that have been returned to the Exchequer; further notes that the Government plans to re-privatise East Coast by February 2015; believes that this puts ideology ahead of the interests of passengers and taxpayers; and calls on the Government to abandon its plans to re-privatise East Coast.’
So far this Early Day Motion has been signed by no Tories and by only two Lib Dems. Greg Mulholland is not one of them.
Sign the petition
Sign up to the Keep East Coast Public petition – Action for Rail are supporting this petition set up by our friends at We Own It, and so is Alex Sobel.
Please sign up and let the Secretary of State know your opposition to these plans
Don’t give up – Britain Can Do Better Than This
[This post is an edited version of material appearing on the Action for Rail website
Read more here
– http://actionforrail.org/the-attack-on-our-railways/keep-east-coast-public/#sthash.Bsy4lnlC.dpuf ]