The news that the franchising process relating to
the West Coast mainline railway route has collapsed came the day after Labour
leader Ed Miliband’s speech to the annual conference trumpeting one nationism.
While Miliband attempted to set out an alternative vision to that of the
cuts crazed Coaltion Government, the collapse of the franchise process offers a
real opportunity to put meat on the bones of his one nationism. What better way
to set out a new vision than to announce the renationalization of the railways
and indeed maybe go further by adding other public services like water, gas and
electricity?
The call for the railways to be renationalized has
grown over recent months, with the latest far hikes allowing tickets to go up
by 3 per cent above the Retail Price Index. The rises come at a time when food,
energy and other living costs are rising while wages flat line or fall.
The rises have helped the campaign of
those who argue for the re-nationalization of the railways. They claim that the
service provided is the most expensive anywhere in Europe.
Figures from the Campaign for Better
Transport (CBT) show a season ticket, including tube travel, for a journey from
Woking in Surrey to central London costing £3,268 last year. This compares to £336.17
in Italy for a similar 22-mile journey from Velletri to Rome.
In
France, the 24-mile journey from Ballancourt-sur-Essonne to Paris cost £924.66.
The RMT union claim that since
privatisation, more than £11 billion of public funds has been misspent. “On
debt write-offs, dividend payments to private investors, fragmentation costs
including profit margins of complex tiers of contractors and sub-contractors,
and higher interest payments in order to keep Network Rail’s debts off the
government balance sheet,” say the RMT, who believe that “removing
complex interfaces, transaction costs, increased debt servicing and private
profit and dividend payments from the industry could save over £1bn a
year, resulting in lower fares and public subsidy.”
Further evidence
of the case for renationalisation comes with the case of East Coast mainline,
which following the collapse of two previous private operators has been run
directly by the state for the last three years.
Directly Owned
Railways (DOR) posted results for the last year showing turnover of £665.8
million, an increase of £20 million, leaving a profit before tax and service
payments to the Department for Transport of £195.7 million, an increase
of £13 million.
Passenger journeys at East Coast, which runs trains
from London to Yorkshire, the North East and Scotland, increased by
2.1%
Customer satisfaction at East Coast rose by 2%, and
the latest punctuality figures were its best since records began in
1999.
There are signs
that the Labour Party may be tipping toward a policy of at least
renationalizing the railways by stealth, taking different lines back into
public ownership as the franchises become due or are reneged upon by their
private owners. It happened with the East Coast line and the same could happen
with the West Coast line.
But the argument
though over renationalization of the railways is but a microcosm of a much
bigger debate on public services generally. And it is on this subject of
re-nationalisation that the Labour Party could at last come up with a big idea
that would appeal to the one nation.
Put very simply
how can a privatized concern, whose first priority is always going to be its
shareholders, ever provide better value for money that a nationalized industry.
There is always going to be a substantial amount of the money raised via the
service going out to shareholders that could otherwise be reinvested in the
service and the workforce.
If the
neo-liberal based argument that the private sector can provide a more efficient
service is accepted for one moment there then has to be an evaluation as to
why. If it is providing a cheaper service that can only be through reducing the
pay, terms and conditions of the workforce. This has implications for
individuals and families, so cannot be for the common good of the country.
So should other
privatized industries be renationalized? The water industry that was privatized
by Thatcher back in 1989
is hardly a shining example of success.
Some 23 years on, 25 per cent (3.4 billion litres a day) of
water is lost through leaks. Leaks have been reduced by just 5 per cent since
privatisation in 1989. In Germany, where the water utilities remain under the
public control of the municipalities, less than 10 per cent is lost.
A look at Thames Water’s record on leakage since privatisation
is revealing. In 2006, Thames Water was leaking 900 mega litres per day. It
missed its leaks target under the regulatory framework for the third year in a
row and was fined. At the same time, the company declared a 31 per cent rise in
pre-tax profits to £346.5 million.
The average customer bill for water has risen by £64 since 2001
and is now £376, while the companies have collectively made a £2 billion in
pre-tax profits and paid £1.5 billion in dividends to shareholders in 2010-11.
Other parts of the energy market tell a similar tale,
shareholders first, consumers second. Even the advocates of privatisation have
not been able to hide the fact in an area like electricity, whilst there has
been a 40% fall in wholesale cost since privatisation, the consumer has seen
only a 25% cut – how much cheaper would it have been to the consumer if those
shareholders had not had to be paid?
The debate over
renationalizing some of these privatized public services is only now seriously
beginning. The case of the railways seems to offer the most conclusive case for
renationalization. The same argument though can be advanced to other areas like
water and electricity.
This is a popular idea that the Labour
Party could adopt and really push forward under the flag of one-nationism. It
would have to be prepared to face down those in the private sector and
Parliament who will attack the idea but this can be done. The offer would be to
provide cheaper transport and energy sources to the tax paying public in
austere times. There can be few better ways in which Miliband could really put
forward a sellable idea that epitomizes his idea of one nationism appealing to
the common good.
see also - 15/10/2012
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