| False Economy: ‏UK privatised rail’s meant ‘higher fares, older trains and bigger taxpayers’ bill!’

Privatised rail has meant ‘higher fares, older trains and bigger taxpayers’ bill’ ~ , transport correspondent, The Guardian.

TUC-commissioned report says rail selloff has brought little private investment in new technology but dearest fares in Europe!

An East Coast train

An East Coast train. The report said the state-run company is reinvesting profits into the railway, whereas 90% of the operating profits of the five largest private train companies were paid out in dividends to shareholders. Photograph: Alamy

Privatised rail has meant higher fares, older trains and a greater bill for the taxpayer, with train companies diverting profits to shareholders with barely any investment, a report has found.

Researchers said the public was “bamboozled” by number-shuffling in the system and called for the abolition of train operating companies, concluding that the selloff of rail had brought little private sector investment in new technology and the most expensive fares in Europe.

The TUC-commissioned report, by the Centre for Research on Socio-Cultural Change at the University of Manchester, says private train companies depend heavily on public subsidy to run services. It claims that the halving of track access charges for companies since privatisation has resulted in a hidden, indirect subsidy from the taxpayer.

Researchers said the five largest private train companies received almost £3bn in taxpayer support between 2007 and 2011. This allowed them to make operating profits of £504m, over 90% of which was paid out in dividends to shareholders, the TUC said. In contrast, they argue that the east coast mainline, which is currently state-run, is reinvesting profits into the railway.

The report said the average age of trains had risen by two years since rail privatisation and carriage space had not increased to match the growth in passenger numbers. The majority of new rail investment had been financed by Network Rail via taxpayer funding or government-underwritten borrowing. Private sector investment in new technology, such as the Pendolino tilting trains, had been underwritten by the state.

The authors said the Treasury kept many of the costs of rail off the public balance sheet and created the “illusion of profitability”, adding that operators, notably Virgin, had played on these confusions to claim unwarranted credit for improvements to rail services.

One of the authors, Professor Karel Williams, said the research showed that the rail franchising system allowed private firms to make easy profits from public subsidy. “It would make sense to abolish the train operating companies and it would cost the taxpayer nothing if it were done as the franchises expired,” he said. “Train and track operation could then be integrated under a new not-for-profit company.”

Frances O’Grady, the TUC’s general secretary, said the study “explodes the myth that rail firms are bringing added value to our railways”. She said: “Rail privatisation has not brought the improvements its cheerleaders promised – the average age of trains has increased and most new investment is funded by the state.

“The government must accept that the current model is broken. Its determination to impose franchising across the network – even on the east coast mainline which is performing well as a nationalised service – shows ministers are ignoring the evidence of 20 years of failure.”

Train operating companies dispute the TUC’s methodology in establishing the full direct and indirect public subsidy. A spokesman for the Association of Train Operating Companies (ATOC) said passengers would be the beneficiaries of a higher subsidy.

Michael Roberts, ATOC’s chief executive, said: “Britain’s railway has been transformed in the last 15 years thanks to the public and private sectors working successfully together to deliver for passengers and taxpayers.

“By introducing competition between train companies to run services, government has ensured operators have played a crucial role in reversing the fortunes of the railway by motivating them to attract more passengers.

“Significant investment plus an industry focused on encouraging rail travel are generating record levels of revenue to pay for more trains, faster services and better stations.”

O’Grady said private train operators’ claim to be responsible for more people using the railways should be “taken with a huge pinch of salt” as passenger growth mirrored changes in the wider economy. ATOC said passenger numbers had grown and passenger satisfaction was at a record high.

The shadow transport secretary, Maria Eagle, said: “Britain’s railways are not delivering value for money for farepayers and taxpayers and need reform. It cannot be right that train companies were left with £305m last year, despite paying less to the government than they received in subsidies. As a first step, ministers must abandon the costly and unnecessary privatisation of rail services on the east coast.”

Transport minister Norman Baker said: “The reality is that the privatised system is delivering in general terms a good outcome for passengers, with more people travelling now than at anytime since 1927 on a network half the size. It is absolutely true we should seek to get the best value for both the passenger and taxpayer, by implementing the McNulty review.”

He said that while his party, the Liberal Democrats, would not have privatised rail in this way, “we are where we are. It may be superficially attractive to allow franchises to lapse but why would any company want to invest in that scenario? The passenger would suffer.”

A Virgin spokesman said: “We’ve not done it single-handedly, but we have customer satisfaction that was unheard-of in British Rail days.”

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UK False Economy1

 

Crime 1

| It’s time to bury not just Thatcher – but Thatcherism!

It’s time to bury not just Thatcher – but Thatcherism ~ The Guardian.

She didn’t save Britain or turn the economy round. We need to break with her failed model to escape its baleful consequences.

They have only themselves to blame. Protests were always likely at any official sendoff for the most socially destructive prime minister in modern British history. But by turning Margaret Thatcher’s funeral into a state-funded Tory jamboree, puffed up with pomp and bombast, David Cameron and his acolytes have made them a certainty – and fuelled a political backlash into the bargain.

As the bishop of Grantham, Thatcher’s home town, put it, spending £10m of public money to “glorify” her legacy in the month benefits are slashed and tax cuts handed to the rich is “asking for trouble”. What’s planned today isn’t a national commemoration, but a military-backed party spectacle.

It’s a state funeral in all but name, laid on for none of the last seven prime ministers. Nothing of the kind has been seen since the death of Winston Churchill, who really did unite the country for a time against the mortal threat from Nazi Germany. Thatcher did the opposite, of course, though every effort will be made today to milk her short but bloody colonial conflict in the south Atlantic for all its jingoistic worth.

It’s hardly a surprise that 60% of the population oppose the public subsidy, or that Buckingham Palace is alarmed at the funeral’s regal dimensions. Now the decision to silence Big Ben has tipped the whole saga into the realm of offensive absurdity.

There’s been much talk about a need for dignity and respect. But the prospect of the leader of a class war government being treated like a respected head of state is itself an insult to the half of Britain that recoils from her memory and the millions of people whose communities were devastated by her policies.

From the moment the former prime minister died there has been a determined drive by the Tories and their media allies to rewrite history and rehabilitate a deeply damaged brand. For a few days of fawning wall-to-wall coverage it seemed like that might be working, as happened in the US after Ronald Reagan’s death in 2004.

But a week on, it’s clear the revisionists have overplayed their hand. Anger and revulsion keep bursting into the open. Simply raising her record reminds people of the price paid for unrelenting deregulation, privatisation and tax handouts to the rich; why she was so unpopular across Britain when she was in power; and the striking similarity with what’s being done by today’s Tory-led coalition.

So there’s been no polling bounce for Cameron, even as he claimed that Thatcher “saved our country”. And while people recognise her strength, polls show clear opposition to many of her flagship policies, including privatisation (only a quarter think it’s delivered a better service). Most don’t believe she “put the ‘Great’ back into Great Britain” at all, her economic policies are seen to have done “more harm than good”, and her legacy is regarded as one of division and inequality.

Which is what the facts show. Far from saving Britain, Thatcher’s government delivered rampant inequality, social breakdown, disastrous financial deregulation, pulverising deindustrialisation and mass unemployment. A North Sea oil bonanza was frittered away on tax cuts for the wealthy and a swollen benefits bill as public services were run down, child poverty escalated and social mobility ground to a halt.

But for all that, her apologists insist, Thatcher did what was necessary to turn Britain’s economy round. But she didn’t. Growth during the 1980s, at 2.4%, was exactly the same as during the turbulent 1970s and lower again in the post-Thatcher 1990s, at 2.2% — while in the corporatist 1960s it averaged over 3%.

And despite claims of a Thatcher “productivity miracle”, productivity growth was also higher in the 60s (and it’s gone into reverse under Cameron). What her government did do was redistribute growth from the poor to the rich, driving up profits and slashing employees’ share of national income through her assault on trade unions. That’s why it felt like a boom in better-off Britain, as the top rate of tax was more than halved, while real incomes fell for the poorest 40% in her first decade in power.

You only have to rehearse what Thatcher’s government unleashed a generation ago to recognise the continuity with what’s been happening ever since: first under John Major, then under New Labour, and now under Cameron: privatisation, liberalisation, low taxes for the wealthy and rising inequality. Thatcher was Britain’s first woman prime minister, but her policies hit women hardest, just as Cameron’s are doing today, while Tony Blair says he saw his job as “to build on some of the things she had done rather than reverse them”.

But Thatcherism was only an early variant (following her friend GeneralPinochet, the Chilean dictator) of what became the neoliberal capitalism adopted or imposed across the world for the next generation. And it’s that model which imploded in the crash of 2008. As even the free-market Economist conceded last week, while demanding “more Thatcherism, not less”, her reforms could be said to have “sowed the seeds” of the current crisis.

Like other true believers, the magazine’s editors fret that the pendulum is now swinging away from the neoliberal model. So does Blair, who remains locked in the politics of the boom years and whose comfort zone remains attacking his own party. So he’s launched a coded assault on Labour’s leader, Ed Miliband, for supposedly thinking a crisis caused by under-regulated markets will lead to a shift to the left.

There’s certainly no automatic basis for such a shift. As history shows, the right can also take advantage of economic breakdowns – and often has. But more than 20 years after Thatcher was forced out of office, the evidence is that most British people remain stubbornly resistant to her individualistic small-state philosophy, believing for example that it’s the government’s job to redistribute income across the spectrum and guarantee a decent minimum income for all.

And crucially, the economic model that underpinned the policies of Thatcher and her successors is broken. As the Labour frontbencher Jon Trickett arguedthis week, we need a “rupture” with the “existing economic settlement” – the Thatcher settlement. That’s the challenge of the politics of our time, not only in Britain. As we remember blighted lives and communities today, it’s time not just to bury Thatcher, but Thatcherism itself.

Link to video: Margaret Thatcher’s coffin arrives at Westminster

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RIP Thatcher