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Living where privatised railways mean subsidising foreign state-run services

rail trackThe railway that passes our constituency Labour party office in Bethnal Green and Bow is owned by Abellio, the Dutch state railway company. Am I alone in thinking this is somewhat surreal?

We supposedly put these franchises out to tender because we wanted the private sector to provide their management know-how. It turns out that this company is not private sector but is the state sector of Holland. So rather than having the British state running British railways, we have the Dutch state running British railways, because they outbid the private rail companies, presumably because they have better management know-how.

Meanwhile, we customers have to pay higher fares, in order that a profit can be made to subsidise the Dutch rail system. We might consider that the Dutch are very good at doing socialism, but they must consider us to be a bunch of mugs.

The East Coast Main Line is once again being put out to tender. Of the three bidders in the process, one of them is a consortium of SNCF, the French state railway company. SBCF, the Belgian state railway service, and most surreal of all, KCR, which is the private company that went bust and is now owned by the British state. So it’s not private companies that we need, but foreign state owned rail companies.

Why do the Tories think that foreigners are better than us at everything? By the way, other bidders include First Group and Virgin.

It may be that privatisation is useful for creating efficiencies, but , if so, this already happened in the 90s. Now that the efficiencies have been achieved, there isn’t a magic wand to create more. If there was then why did Richard Branson complain about First Group’s winning bid for the West Coast line being too low to make any money? First Group eventually dropped their bid, because Branson was right. This is a fixed cost business. There are no further efficiencies to be made.

Ed Miliband has put Mary Creagh MP in charge of the rail policy. She is bright, and is highly rated by Progress, so we’ll wait and see what her recommendation is. We know that the Tories will push ahead with the franchise auction. The question is whether we campaign against them.

A £1bn sale of the franchise is £1bn added to tickets, before the owner has had a chance to increase ticket prices to achieve their profits. Those constituency Labour parties in the marginal seats along the line may well appreciate a campaign that reminds voters of who the Tory party really represent.

Since the East Coast Main Line has been run by the state, everyone has been happy. The staff are happy and the customers are happy, judging by the crowds in particular. It would make sense to continue as we are. It has become difficult to justify such expensive franchise sales.

If ending the franchise system were to become our policy, then we don’t need to buy out the private operators, as this would be expensive. It would be better to simply wait for them to expire, and then not offer them for renewal.

4 Comments

  1. Robert says:

    This is what happens when you enter an EU, or the United States of Europe, people can buy into your country lets hope some of the state funded groups can make our railways like theirs cheaper. our fecking lot cannot.

  2. James Martin says:

    “It may be that privatisation is useful for creating efficiencies, but , if so, this already happened in the 90s.”

    Really? What efficiencies would those be then? The attempted driving down of wages? Cutting pensions? Outsourcing maintainance work to cowboy companies who put safety at risk? Removing staff from stations making them less safe?

    Perhaps the author would like to muse on the other ‘efficiencies’ privatisation can bring? E-Act academy chain for example, where the snouts in the trough bosses swanned around in chauffer driven limos, stayed at luxury hotel suites and had massive pay rises at the expense of teachers and support staff in the schools unfortunate enough to be run by them.

    The only thing that privatisation is ‘efficient’ at is bleeding the taxpayer and attacking the terms and conditions of the workers in the industries and services they control.

    1. Jon Lansman says:

      James Martin: I think you’re absolutely right to question whether there ever any “efficiencies” resulting from privatisation – cutting wages and conditions aren’t efficiencies, they’re a form of redistribution from many poorly paid workers to often wealthy shareholders. Even if there were any genuine efficiencies, they must be set against the diseconomies of the splintering of the structure, the contractual costs of the multiple owners or operators of trains, stations, and track with commissioners, regulators and each other and so on. And the cost falls on the passenger (as well as the workers).

      In fairness to Dan, my understanding is that he wasn’t necessarily accepting that there were efficiencies, merely saying that, if there had been efficiencies, they’s long gone and there was no remaining case for privatisation at this stage.

  3. Dan McCurry says:

    I think the method of creating efficiencies was to reduce investment until crashes became so frequent as to be economically in-viable. Picture the bean counters at the side of the track at Hatfield, scratching their heads and asking whether it would have been cheaper to fix the points.
    It’s a corporate model of long-standing repute.
    Whether or not you and I agree with it is an entirely different matter, but it was about delivering more for less.

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