Tory outsourcing and privatisation fails our railways

Only public ownership can improve Britain’s railways, writes KEN LIVINGSTONE.

While it has not received the mainstream media attention it deserves, developments in recent weeks and months have further shown that the Tories have no strategy for improving Britain’s railways.

In fact, their obsession with further outsourcing and privatisation means that the mistakes of the past 20 plus years are likely to be repeated yet again.

Tory Transport Secretary Chris Grayling recently announced the West Coast Partnership – this lucrative contract extension on the West Coast was remarkably offered to Virgin and Stagecoach even though the Tories recently gifted them a £2 billion bailout from the taxpayer on the East Coast.

As Labour shadow transport minister Andy McDonald put it at the time of the East Coast bailout, “this is yet another Tory handout to private shareholders at the public’s expense. Failing train companies should not be awarded future contracts, but this government is rewarding them for failure by extending their lucrative deal.”

Is any further proof needed that Tory policy is in chaos in this area than awarding a profitable contract to Virgin and Stagecoach on the West Coast while simultaneously confirming the same companies have collapsed on the East Coast?

It is absolutely clear that the Tories seem to have forgotten that their duty is to protect taxpayers’ interests and our public services, not sacrifice them to private shareholders.

Our rail fares have soared by 32 per cent since the Tories came to power in 2010 while failing train companies have been handed billions of pounds of passenger and taxpayer cash.

Now we have another rip-off to add to the seemingly never-ending series of examples that illustrate just what a bad deal for taxpayers the privatisation of the railways has turned out to be.

Again and again, the privateers on our railways have taken the public sector for a ride.

From the fiasco of Railtrack to the issues around Metronet, to the temporary nationalisation of the East Coast line last time around and to the chaos around Southern Rail over the last few years, railway privatisation has totally failed and transport workers and passengers alike overwhelmingly agree this is the case.

The reason that the government – unlike the public – doesn’t get this is that, as with so many issues, the Tory development of policy in this area is guided by neoliberal ideology not what works best.

As I’ve written in this column before, our railway network is now the most expensive in Europe, meaning that both taxpayers and passengers get a bad deal.

Transport is something that should be run as a public service for the benefit of people and the economy. Instead, when it comes to the great rail rip-off, we’re spending millions subsidising the profits of private companies, while passengers are left frustrated as their local services are removed or not properly funded and fares increase while staffing levels are cut.

But the real issue is that it is inherently wasteful to run these services on a privatised basis. The nature of the privatising companies is that a significant proportion of the profits of their activities has to be paid in dividends to shareholders rather than reinvested in the railway service.

This is money wasted. A publicly owned company would be obliged to reinvest any revenues back into the transport system and could keep fares down.

Furthermore, privatisation is justified on the grounds that the private sector is driven through the rigour of competition to be more efficient and more responsive to passengers’ needs.

This is a fiction in the case of a natural monopoly like a railway. Apart from the brief period of competition among bidders for contracts, there is hardly any day-to-day competition at all. No-one is going to build a rival railway line and poach passengers from the private franchisee. They are under no pressure from any competition at all.

In such circumstances, it is more rational, and it makes more sense in terms of sustaining investment, for rail services to be publicly owned.

Jeremy Corbyn understood this and, linked to his programme of investing in Britain’s future, has won support for Labour having a clear policy of bringing our railways back to the people.

The regular disasters on the railways due to privatisation, the broken markets in water and energy and the recent collapse of Carillion mean that more and more people are realising that the decades-long obsession with privatisation, PFI and outsourcing was an ideologically driven mistake.

The state of our railways is a clear demonstration of the fairy tale of privatisation – that the private sector takes on the risk as well as the profit. In truth, every time a privatisation of a vital public service fails, the public sector picks up the tab.

This culture of parts of the private sector fleecing the taxpayer has to stop. Only Labour will end Chris Grayling’s rail privatisations and run our railways under public ownership.

In contrast to this, the government’s attachment to continuing privatisation is due to ideological dogma not what is best for the people and economy of Britain.

Now is the time to build support for Labour’s investment-based alternative.

First published in the Morning Star.