Why We Can't Afford a Privatised Railway
Posted: 17/07/2012 14:30
David Cameron has hailed it as the "biggest modernisation of our railways since the Victorian era". But we really shouldn't get too carried away about the government's £9.4bn programme of investment in the railways announced today, or believe it will do much to alleviate our transport problems. For a start, building work on the projects will not start until 2014 at the earliest. And even when the modernisation does get going, the basic problem of our railways will remain: namely that they are run for private profit and not as a public service. For that we have to blame a certain Mr John Major.
While there's stiff competition for the prize of barmiest Tory privatisation of the 80s and 90s, the sell-off of the railways has to be a strong contender. Yet despite widespread public opposition - including from within the Conservative party itself, the Major government, taking its cue from the pro-privatisation zealots at the Adam Smith Institute, pushed the scheme to destroy British Rail through and Labour, to its shame carried on with the privatised system when in office.
Twenty-six years on what have been the results? Privatisation means that we have by far and away the most expensive railways in Europe. Figures published by the 'Campaign for Better Transport' showed that the price of season tickets for commuter train journeys to the capital cost between 3.5 times and 9.7 times more than in other European countries, where railways are still publicly owned. Meanwhile, a Just Economics report by the RMT union, has shown that day return-tickets in the UK - at 26p per kilometer, are over three times more expensive than in France.
In late 2009 we saw Britain's first £1,000 rail fare, while this January the misery for rail passengers got even worse with average increases in fares of 5.9%. And that's not the end of it. Not only do we pay more when we purchase our rail tickets than our European neighbours, our privatised railways receive around five times more in public subsidy than British Rail did in the last year of its existence. So much for the claims then, made by the serial privatisers in the 1990s, that privatisation would lead to cheaper services and less cost to taxpayers.
We can't realistically expect the privatisation-mad Coalition to reverse John Major's disastrous policy, but what about Labour? Back in 2009, writing in the New Statesman, I urged Labour to support re-nationalisation.
The party unfortunately didn't go for it in its 2010 General election manifesto, but there could be a shift occurring now: it was recently reported that Labour is to consider re-nationalisation as part of its policy review.
Bringing the railways back into public ownership would be a hugely popular policy (polls show around 70% in favour) and Ed Miliband would gain support not only from the left, but also from frustrated and long-suffering Tory-leaning commuters in the south-east.
Pro-privatisation zealots will of course tell us that it can't be done and it would cost the government too much money. But re-nationalisation can be done: in New Zealand, the Labour government the brought the railways back into public ownership after the country's own disastrous experience of privatisation.
As to the question of cost, as The Huffington Post reported, a report from the think-tank Transport for Quality of Life says that renationalisation could save the taxpayer £1.2 billion a year "through cheaper borrowing costs, removing shareholders' dividends and reducing fragmentation".
The reality is that it's not re-nationalisation which we can't afford, but continuing with privatisation.