Unease as rail campaign support grows
Campaigners for the return of rail to the public sector are feeling uncomfortable. Demanding an end to private profiteering in the rail industry used to be the preserve of the rail unions and the political left. We felt at home as a principled minority. Now we increasingly find ourselves in the majority. It doesn’t feel right.
Even Tories are starting to question the franchising that was cobbled together by John Major to accommodate something that even the evil Thatcher called ‘a privatisation too far’. The aim of the legislation was spelled out. Firstly, it was to introduce competition. That hasn’t happened. There is no competition on lines. Secondly it was supposed to make rail more efficient. That has not happened, as the McNulty Report points out with great clarity. And thirdly it was supposed to cut public subsidies. That has not happened. They have increased year on year. So the Tories defend the current system for no other reason than they introduced it two decades ago. They are finding it increasingly difficult as the grumbles of their south-east commuter-belt backers begin to turn into snarls as prices rise and service doesn’t.
But even more uncomfortable for rail campaigners, even the private profiteers are now siding with us. It became apparent during the bidding for the West Coast franchise (London, Manchester, Glasgow) that even the bidders weren’t sure about the rules. Virgin claims the government acted unlawfully in giving the franchise to First Group, questioned how much a ‘shareholder loan’ should be and raised issues about ‘risk adjusted premiums’. In short, they pointed out that the system is so complicated that no one is sure what they are doing. Even the bidders don’t know what is going on.
The public, on the other hand, is finding out how much it costs, so they are losing any faith they may once have had in franchising. Virgin casually mentioned that to make the bid had cost them £14 million. So how do they get that back? Slap it on the tickets! That is £14 million extra the public pays simply because of franchising. So why not do away with it?
The West Coast fiasco also brought to light the staggeringly unscientific way that companies bid. FirstGroup said its bid was based on annual revenue growth of 10.4%. The Virgin bid was based on 8.5% growth. And we all know that both these figures are somewhere between gobbledygook and nonsense. They are fingers in the air, hopeful dreams or vague predictions. And now passengers also know from the East Coast line experience that if a rail company doesn’t squeeze enough profits out of them, it simply hands back the keys and strolls away, as National Express did at the end of 2009.
In fact, the only people who remain in favour of franchising are foreign state-run railways, who have taken to buying UK franchises, like Deutsche Bahn, NedRail and Abellio. And how come they are successful enough to do this? Because their governments have ensured that their railways remain centrally controlled, publicly accountable and vertically integrated: nationalised, in short.
It’s no wonder we rail campaigners are worried. With rail, and especially fares, moving inexorably up the political agenda, we’re in danger of garnering enough broad support to be popular. It’s a strange experience. Just doesn’t feel right …