Latest post on Left Futures

The public wants rail, water, energy re-nationalised, and it needs doing

public ownershipThe latest figures show that a season ticket, including tube travel, from Woking in Surrey to central London cost £3.268 last year. A similar 22-mile journey in Italy from Velletri to Rome cost just £336. In France the 24-mile journey from Ballancourt to Paris costs £924. The RMT argues that the vastly higher costs of rail travel in the UK largely reflect the fragmentation of the rail system into a myriad pieces. Removing complex interfaces, transaction costs, increased debt servicing and private profit, and dividend payments from the industry could save more than £1bn a year, leading to lower fares and less public subsidy. Altogether they believe that since privatisation more than £11bn of public funds hsve been mis-spent on debt write-offs, dividend payments to private investors, fragmentation costs , including profit margins of complex tiers of contractors and sub-contractors, plus higher interest payments to keep Network Rail’s debts off the government’s balance sheet. Not a way to run a railway.

The Tory rationale for privatisation – that it would be more efficient – has been shown unequivocally to be false. State subsidies since the system went private have more than doubled. On the East Coast mainline two previous private operators have collapsed. But the service then run directly by the State has been strikingly successful. Directly Owned Railways significantly improved pre-tax profits, increased passenger journeys, and raised customer satisfaction and punctuality performance.

The record of other privatised industries is also remarkably poor. Some 24 years after the water industry was privatised in 1989 by Thatcher, a quarter of all the water distributed – 3.4bn litres a day – is lost through leaks. During those 24 years the level of leaks nationally has been reduced from 30% by just 5%. By contrast, in Germany, where the water utilities remain under the public control of the municipalities, leaks are below 10%. In 2006 Thames Water was leaking 900 mega litres per day. and having failed to improve on that for the third year running, it was fined. That didn’t however stop Thames Water from declaring a 31% rise in pre-tax profits to £347 millions. Across Britain as a whole the average water bill has risen by £64 since 2001 and is now £376 a year, but the companies collectively have made £2bn in pre-tax profits and paid out £1.5bn in dividends to shareholders in 2010-11. A customer rip-off and a bonanza for management and shareholders.

The same applies in other privatised areas, especially in energy markets such as electricity where wholesale costs have fallen 40% since privatisation, but the consumer has only seen a 25% cut. That can be replicated elsewhere, notably in petrol prices. For very good reasons privatisation is not popular. Why doesn’t Labour exploit that?


  1. swatantra says:

    Here’s a chance for Ed to come out with some firm pledges. It can be done. A way will be found. But will he dither? It was quite embarrassing to see Timms prevaricating on whether the Bedroom Tax will be scrapped. He wouldn’t give an answer. If its good enough to scrap in 2015, its good enough to scrap now.

  2. Rob the cripple says:

    Why now with conference coming next week are we going to see an announcement at conference and Labour let it go now to gauge the reaction.

    I’d back the gas and electricity water and railways who would not, well labour leaders normally.

© 2024 Left Futures | Powered by WordPress | theme originated from PrimePress by Ravi Varma