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A case for good of the public.


ALL forms of transport are essentially a 'public good'; whether it is public transport, which is clearly an essential public service, or private transport, which relies on publicly-owned roads. The complete mess over the refranchising of the West Coast Main Line is just the tip of the iceberg when you start to unpick the shambolic, fragmented, publicly-funded privatised, cash cow that the current rail industry is.

It should be bad enough that the WCML will see uncertainty and instability for the next few months at least, as well as costing the tax payer PS40m compensation to those who bid for the franchise.

New figures from the Department for Transport, unearthed by the rail union RMT, show almost half of UK rail franchises now receiving taxpayer bail-outs due to Government failures. The information reveals all of the rail franchises eligible for receiving taxpayer financial support under loaded contract rules are claiming it, with the exception of Northern Rail and London Midland who could move on to the same special measures shortly.

RMT research exposes the total level of revenue support paid back to the train companies has shot up to PS451m, meaning nearly half the PS1bn paid to the Government in premiums is returned to the operators.

The revenue support payments have gone up from PS290m in a year and are still rising. The system of revenue support is where under the franchising 'cap and collar' procedures, private train operators can get more subsidy or pay less premium if their revenue undershoots original projections.

The Parliamentary information shows eight of the 19 Train Operating Companies (TOCs) are being bailed out by the taxpayer because they and DfT have their sums wrong, including the operators of controversial WCML, Virgin West Coast. Interestingly, the TOCs are still generating significant profits, despite needing the public subsidy to make the rail franchises they run worthwhile.

The expensive shambles of rail franchising extends beyond the fiasco of the West Coast Main Line as these figures indicate a majority of the UK's rail routes will soon be on corporate welfare due to a mixture of bogus train operator projections and Government and departmental incompetence.

It is high time serious consideration was given to re-nationalising the rail industry. Doing so would save the tax-payer PS1.2bn per year. This is much better than squeezing the pay packets of public sector workers.

Kevin Rowan is regional secretary of the TUC
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Title Annotation:Business
Publication:The Journal (Newcastle, England)
Date:Oct 8, 2012
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