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Railways are too important to run on greed

In the novel Catch 22, one of the central characters is an entrepreneurial war profiteer by the name of Milo Minderbinder.

Caught swindling his fellow countrymen, Milo likes to evoke the “historic right of free men to pay as much as they have to for the things they need in order to survive”.

When Milo’s profiteering results in the price of food in the army mess hall climbing so high that the enlisted men can no longer afford to eat, Milo valiantly cites the alternative. And since he is an unapologetic champion of the free-market, the alternative is for the enlisted men to exercise their freedom of choice and “choose” starvation.

The twisted logic of Milo Minderbinder reached the summit of political power in Britain under the Conservative government of the 80s and 90s. Public services were given away at knock down prices to a private sector which, it was assumed as a matter of course, could run things better than workers or the state. The last significant privatisation before the Conservatives lost power to New Labour in 1997 was British Rail, which was split up and sold off in 1994. The logic of the market dictated, after all, that if you didn’t like how a company ran a service you could choose, of your own free will, not to use it. Privatisation engendered choice, so it was said. And like the men in Milo Minderbinder’s mess hall, if you didn’t like it you could always take your money, exercise your freedom of choice and, well, go and live in the woods or something.

Only on the pages of Atlas Shrugged could life be that simple. The real-world consequences of rail privatisation were huge profits for fat cat bosses, large dividends for shareholders and enormous price hikes for passengers. Today in Britain some of the highest train fares in Europe co-exist alongside some extremely low rates of electrification and embarrassingly shoddy services. Despite ten years of above-inflation rail price increases, which have left some in the south-east spending 15 per cent of their salary on rail travel (usually, perversely, on trains to get them to and from the place where they earn that salary), the cost of supporting the rail network is much greater today than it was before the dissolution of British Rail. In 2010/11, Network Rail was subsidised by the taxpayer to the tune of £3.96 billion. This compares with an average of £1.4billion over the 10 years leading up to privatisation. In light of the expected 6 per cent increase in fares, 10 per cent of commuters say they will no longer be able to afford to travel by train when new prices kick in.

Sir Richard Branson is apparently “furious” at what he called the “insane choice” of rival FirstGroup to run the profitable West Coast Main line. FirstGroup bid £5.5bn, more than double Virgin’s existing payments, leading to fears that FirstGroup will cut staff, scrap services and push up fares to meet its obligations when it takes over in December. Squabbling over who the contract was awarded to misses the point, however. And Mr Branson would say that, wouldn’t he? Happy to move Virgin’s brand division to Switzerland to save the company millions in tax revenue, Virgin Rail has in the past depended heavily on state money and been the subject of a large number of passenger complaints.

The rail network epitomises the grotesque idea of private gain and public loss that only a few years ago left taxpayers picking up the bill when the banks crashed. Just as the government could not let banks that were “too big to fail” go under, so it cannot permit the companies that run our trains to fail because the consequences would be too severe. For obvious reasons the rail network cannot be turned off for a few days based on the crackpot idea of letting the market run its course. And so the train companies resemble a compulsive gambler placing bets with somebody else’s money. The result is a grotesque parody where profits go to fat cats while the tab for bad business practice will always be picked up by the taxpayer.

If recent opinion polls are anything to go by, over half the British public would support full nationalisation of the railways. Even Conservative supporters appear to have abandoned at least a small portion of the failed dogma of the 1980s, with a majority saying they would prefer nationalisation to the current shambles. The only thing that appears to be stopping the political class taking action and bringing the railways back under public ownership is blind faith in an ideology which looks increasingly incompatible with a civilised way of life: public bad, private good. Karl Marx once wrote that the tradition of all dead generations “weighs like a nightmare on the brains of the living”. Whatever you think of the man, it doesn’t take a communist to recognise that a capitalist rail network is both tragedy and farce mixed with an unmistakable stench of greed.

3 Comments

  1. Robin Thorpe says:

    This issue, unsurprisingly, was on Any Questions on Friday. Simon Heffer held court with a rather confused and contradictory defence of the superiority of privatised rail. There were 3 main strands of his argument.
    i) I am a rabid free-marketeer;
    ii) It would be more efficient if TOC’s were to own the track upon which they operate, as this would reduce the conflict between operation of track and operation of passenger services;
    iii) because of the cost of lawyers and bureaucrats (see point ii regarding conflict) the cost of the service has increased but the quality of the service is no better than it was 30 years ago.
    His first point is obviously ideological and this prevents him from seeing the contradiction in his argument that the increase in cost is because it was the wrong sort of privatisation. He later agrees with another panellist that a market should mean choice and that a monopoly on the service is a bad thing – hello, a minute before he wanted the operators to own the track. This sort of argument is typical of those who wish to defend the principle of privatisation, no reason or evidence, just belief. Unfortunately there are too many people whose words carry conviction regardless of what they are saying; Peter Hitchens is another pompous idiot who thinks that his words are worth more than others simply because they are his (see his recent discussion on Newsnight with Russel Brand over the treatment of addiction).

  2. John Ruddy says:

    Lets not forget that Virgin Rail’s bid involved more cuts – to staff and service – than that proposed by First. The difference being in the amount of money going straight into the pockets of Branson and Soutar.

    Oh, and lets contrast the attitude of the two companies to their workers – Virgin, who prefer to fire employees for joining a union, against First, who have an MD when at London Transport reduced industrial action to their lowest for a generation by working WITH staff.

  3. Well written. I agree with you that we cannot deny the importance of railway as majority of people in pakistan can not afford to travel via planes so train remains the only better option for them, so in order to reduce the problems of common man, some measures should be taken immediately.

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