Research backs day of protest against rail privatisation

By agency reporter
November 5, 2013

Public transport campaigners are holding protests today (5 November 2013) at over 30 UK rail stations to mark the twentieth anniversary of the Railways Act, which paved the way for the privatisation of the UK’s rail network.

The protests, which have been organised by the Trades Union Congress (TUC) Action for Rail campaign, will highlight how rail privatisation has failed to deliver for rail users and taxpayers on a number of key tests.

These include value for money. Research carried out by the Centre for Research on Social-Cultural Change (CRESC) at the University of Manchester shows that train operating companies are entirely reliant upon public subsidies to run services.

The top five recipients alone received almost £3 billion in taxpayer support between 2007 and 2011. This allowed them to make operating profits of £504 million – over 90 per cent (£466 million) of which was paid to shareholders.

By contrast, the state-run East Coast Mainline will have returned £800 million to the taxpayer by the end of the year 2013.

The campaign is also highlighting affordable fares. Twenty years on from rail privatisation the UK also has the most expensive train fares in Europe, with average ticket prices rising nearly three times faster than wages since the recession, they point out.

TUC analysis shows that some season tickets have increased by over £1,000 since 2008. A Reading to London zone 1 season ticket is set to cost £4,904 next year, up from £3,710 in 2008. The TUC’s rail fare rise projector – ­available at – shows how regulated fares have increased since 2008.

On additional investment, the average age of trains has risen since rail privatisation, from 16 years in 1996 to 18 years old today. Just £1.9 billion was spent on rolling stock between 2008 and 2012, compared to £3.2 billion between 1989 and 1993 (the four years before privatisation).

Over 90 per cent of new investment in recent years has been financed by Network Rail (the taxpayer-funded body responsible for rail infrastructure), and comes mainly from taxpayer funding or government-underwritten borrowing, according to CRESC.

Separate research carried out for rail unions shows that, rather than reducing costs, rail privatisation is costing taxpayers £1.2 billion a year as a result of fragmented services, higher costs of borrowing and money leaking out of the service in the form of profits and dividends.

The analysis, carried out by Transport Quality for Life, also shows that eliminating this £1.2 billion-a-year wastage could result in an 18 per cent cut in rail fares across the board.

Action for Rail campaigners will be handing out postcards later today at stations across the country, including London Kings Cross, Birmingham New Street, Liverpool Lime Street and Newcastle. The postcards will call on MPs to put people before profits and return the railways to public ownership.

TUC General Secretary Frances O’Grady commented: “Rail privatisation has been a colossal market failure. Rather than bringing in the improvements and investment its cheerleaders promised, it has succeeded only in pushing up costs and increasing the burden upon the UK taxpayer.

“Twenty years on from the Railways Act we have a system of corporate welfare with train companies reliant upon the public purse to turn a profit. Virtually all of this ends up in shareholders’ pockets, rather than being used to improve services.

“Tragically the government is refusing to accept that the current model is broken and is recklessly pushing ahead with the re-privatisation of the East Coast Mainline, despite it thriving as a publicly-owned service. Ministers have learnt nothing from the last 20 years of failure,” she said.

ASLEF General Secretary Mick Whelan added: “Privatisation has proved to be a disaster for this country. Even Margaret Thatcher, that arch advocate of privatisation, admitted that privatisation of the railway was ‘a privatisation too far’. It was a foolish, ideologically-driven policy by John Major’s government which has, each year for the last twenty years, sold Britain short.

“Private companies should be about investment and about risk. But there is no investment and there is no risk. Because the privatised train companies think the public should pay for the investment, they make a private profit, and then move that profit overseas. It’s a disgrace.

“That’s why we think it’s time to bring the railway back into public ownership so that, like the East Coast, the railway can deliver a proper service to the public, and bring money back to the exchequer,” he concluded.

“From the horrific consequences of Railtrack at Hatfield and Potters Bar, to the cold hard truth that British passengers are now paying the highest fares in Europe to travel on overcrowded and unreliable services that have been starved of investment, rail privatisation has been a catalogue of shame," claimed RMT General Secretary Bob Crow.

“For 20 years the political class, of all parties, have failed the British rail passengers and workforce, while overseas state operators have been allowed to plunder our services to keep costs down on their own turf. It is a shocking indictment that £3.5 billion has been robbed in private dividends while the essential maintenance backlog stands at around £1 billion and profit is placed head and shoulders above safety.

“This week we remember that 20 years of private profiteering and destruction on our railways and we step up the fight to bring the entire network back under public control,” Mr Crow said.

TSSA General Secretary Manuel Cortes said: ”Passengers have paid a very high price indeed for this typical piece of political folly from the Conservatives – fares have more than doubled over the past 20 years. They are now the highest in Europe and they are due to go up again by more than inflation for the next five years as well.”

In the UK parliament, Green MP Caroline Lucas has called for railways to be taken into public ownership within a democratic framework.


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