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Privatised railways have failed passengers and taxpayers

bbbrThis week began with protests at Northern Rail stations, including Seaham, campaigning against the introduction of higher fares, threats to rail services, and job cuts on the rail network. Northern Rail has been pressed by the Department for Transport to raise extra revenues as sixty nine percent of their costs are covered by subsidies they receive from Government. However, this did not stop them paying dividends of £36 million to shareholders.

The failure of private train operators and the franchising process continues to hurt commuters. Changes to off-peak tickets will mean they are no longer valid between 4:00pm and 6:30pm on weekdays, leaving commuters with a choice of waiting longer and paying more for their journeys home, with some travellers facing fare hikes of up to 117% on some services.

The Campaign for Better Transport (CBT) today attacked the Northern rises, saying they would particularly hit part-time and shift workers. The Hexham to Newcastle route, a popular North East train service, has seen a 100% fare increase from £3.55 to £7.10. This cannot continue and we need a real alternative for our rail services.

I welcome Labour’s commitment to establish a state-owned train company to compete against private companies such as Virgin and Stagecoach, which could see some parts of our rail network renationalised, but I would like to go further. I believe the whole rail franchising experiment has failed commuters and the taxpayer. We have seen higher rail fares, some of the highest in Europe, the continuation of subsidies, with the top five operators receiving almost £3 billion from the Treasury between 2007 and 2011, and failed operators, such as GNER and National Express, leaving the network in chaos when they did not deliver their contractual promises.

Last year, the Government conceded that the botched franchise process for the West Coast mainline cost taxpayers at least £50 million with the House of Commons Public Accounts Committee warning the failed competition process was likely to cost more than the Government admitted.

We are now in an absurd position where the successful state owned company, Directly Operated Railways, who took over the running of East Coast Mainline following the withdrawal of National Express, will not be allowed to compete to continue to run the franchise. This is despite delivering £235 million in profits to the Treasury. Worse still, there is nothing to stop previously failed operators from taking over the franchise, and while the Government will prohibit the UK state owned companies operating the franchise they have no issue with foreign state owned companies operating the franchise.

Privatisation has failed, with reports estimating that it has cost the Government an extra £1.2 billion a year through private profits and dividends, fragmented services and higher borrowing costs. The public over-whelming support renationalisation of rail services, with opinion polls regularly showing support above 70 per cent. This can simply be achieved by returning each franchise into public hands as the contracts expire.

I believe we should stop repeating the mistakes of the last twenty years of private railways. Continuing with the status quo is simply unacceptable, and we need a real alternative for rail.

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