Ending privatisation

returns to private lenders and investors – a total leakage of more than £6 billion since 1996. “Catalyst have shown that public ownership will plug an enormous financial hole in the railways that has been leaking at least £800 million in public money into private pockets every year since 1996,” RMT general secretary Bob Crow said. “The study shows that privatisation has already cost taxpayers more than £6 billion, and that bringing the railways back into the public sector will reap a rail rebate for Britain of at least £500 million every year. “Catalyst are absolutely right to warn that leaving things as they are will mean private-sector costs spiralling further out of control and a bleak future of service cuts, job losses, fare rises and ever-growing congestion and pollution on Britain’s roads. “Public ownership is now the only sane option so let’s have a big turnout on April 30 for the London rally,” Bob said. RMT news – Rail against privatisation TAKING BRITAIN’S railways out of the private sector is the only option in the light of new evidence of the huge and growing cost of privatisation to taxpayers, according to a new report by the Catalyst think-tank. It reveals that clearing the privateers off Britain’s railways would save the taxpayer at least half a billion pounds every year (see panel opposite). The report makes the economic case for bringing train operating companies, rolling stock companies and infrastructure back in-house. The simplest way of bringing passenger operations back into the public sector would be to take them over as and when current franchises expire. Restoring network infrastructure and rolling stock to public ownership would entail a one-off increase in public debt by, at most, 2.15 per cent of GDP. This capital investment could produce immediate savings of £300 million or more a year. On the other hand, any private sector investment in the railway must ultimately be paid for by farepayers and taxpayers – with interest. Around £800 million a year is taken out of the industry as Ending privatis ‘the only sane option’ rap railagainstprivatisation 16 Rail renationalisation could save £500 million a year, says Catalyst BRINGING Britain’s railways back into public ownership could produce immediate savings of more than £500 million a year, followed by steady improvements resulting from better integration, according to the thinktank Catalyst. Last year delegates at the Labour Party’s conference voted for an “integrated, accountable and publicly owned railway”. Ministers argued that such a move would be too expensive and deprive the industry of private sector investment. But a pre-election briefing paper circulated by Catalyst shows that renationalisation could be carried out in a third-term without breaching the government’s fiscal rules. Drawing on research by Professor Jean Shaoul of Manchester University, it shows that ousting the privateers could produce immediate savings of at least £500 million a year as well as leading to further savings and service improvements over the medium term as the industry was reintegrated. Key points from the briefing include: G Any private sector investment in the railway must ultimately be paid for by farepayers and taxpayers - with interest. Around £800 million is taken out of the industry every year as returns to private lenders and investors, a total leakage of more than £6 billion since 1996. G The majority of passenger services could be taken into the public sector at no cost. Reductions in regulatory bureaucracy and in the subsidies paid to private Train Operating Companies could save more than £200 million a year. G Restoring network infrastructure and rolling stock to public ownership would entail a one-off increase in public debt by, at most, 2.15 per cent of GDP. This would not breach the government’s Golden Rule or Sustainable Investment Rule. This capital investment could produce immediate savings of £300 million or more a year in current spending. G Overall, the most conservative estimates indicate that bringing the railway system back into public ownership could produce immediate cash savings of £500 million a year or more through reduced bureaucracy and leakages to private providers of finance. Over the medium and longer term, reintegration would produce further savings and improvements as the post-privatisation trend to waste and cost-escalation was reversed. G Rolling stock companies should also qualify for a one-off windfall tax on excess profits. If this was calculated and applied in the same way as Labour’s 1997 windfall tax on privatised utilities, additional revenue of £100 million to £200 million could be yielded. Martin McIvor of Catalyst said that Britain could not afford not to take the railways back into public ownership. “Continuing with the status quo means continuing with low growth, poor performance, compromised safety – and spiralling cost escalation. The Exchequer will not bear this increasing burden indefinitely - sooner or later there will be pressure to shift the costs of privatisation to passengers, through fare rises and cuts in services. Either way, the public loses. “Britain’s railway has a vital role to play as part of a rejuvenated transport strategy for the 21st century, delivering vital social, economic, and environmental benefits. To meet these public interest objectives, we need a railway that is public owned and publicly accountable, and which delivers a real return on the public money invested in it,” he said. G Catalyst is an independent think tank of the left committed to promoting “practical policies for the redistribution of wealth, power and opportunity”. For more information please contact the Catalyst office on 020 7733 2111 or visit www.catalystforum.org.uk. Email: catalyst@catalystforum.org.uk at 150 The Broadway, London SW19 1RX. RMT news – Rail against privatisation That this House notes that since November 2003, passenger services have been operated in the public sector on South Eastern trains; further notes that since that time punctuality figures have improved in every quarter; further notes that in the Network Rail areas where maintenance contracts were first brought in-house delays caused by infrastructure failures have fallen between 36 per cent. and 50 per cent; welcomes these developments alongside the growing support for public ownership of the rail network; and supports the principle of an integrated, publicly-owned, publicly-accountable railway. sation 17 LABOUR PARTY Abbott/Diane Austin/John Banks/Tony Barnes/Harry Bennett/Andrew F Berry/Roger Best/Harold Betts/Clive Bradley/Keith Burden/Richard Campbell/Ronnie Caton/Martin Chaytor/David Clapham/Michael Clark/Helen Cohen/Harry Cook/Frank Cook/Robin Corbyn/Jeremy Cousins/Jim Cox/Tom Cruddas/Jon Cryer/Ann Cryer/John Cummings/John Cunningham/Jim Davey/Valerie Davidson/Ian Dean/Janet Dismore/Andrew Dobbin/Jim Donohoe/Brian H Drew/David Ennis/Jeff Etherington/Bill Fisher/Mark Flynn/Paul Follett/Barbara Francis/Hywel Gapes/Mike Gerrard/Neil Godsiff/Roger Grogan/John Hall/Patrick Hamilton/David Hepburn/Stephen Heyes/David Hoey/Kate Hopkins/Kelvin Hurst/Alan Iddon/Brian Jones/Lynne Keen/Alan Lewis/Terry Lloyd/Tony Mahon/Alice Marris/Rob Marshall/David McCafferty/Chris McDonnell/John McNamara/Kevin McWalter/Tony Meacher/Michael Mitchell/Austin Naysmith/Doug Olner/Bill Osborne/Sandra Perham/Linda Pollard/Kerry Pound/Stephen Prosser/Gwyn Sarwar/Mohammad Savidge/Malcolm Sawford/Phil Sedgemore/Brian Shipley/Debra Simpson/Alan Singh/Marsha Skinner/Dennis Smith/Chris Smith/Geraldine Smith/Llew Strang/Gavin Taylor/David Trickett/Jon Truswell/Paul Vis/Rudi Walley/Joan Wareing/Robert N Williams/Alan Williams/Betty Wood/Mike Wright/Anthony D LIB DEMS Barrett/John Chidgey/David George/Andrew Hancock/Mike Jones/Nigel Pugh/John Russell/Bob Sanders/Adrian PLAID CYMRU Price/Adam Thomas/Simon RESPECT Galloway/George SNP Ewing/Annabelle Over 100 MPs sign Early Day Motion 382 calling for an end to rail privatisation EDM 382 Below are MPs by party group who have signed public ownership EDM PUBLIC OWNERSHIP OF THE RAILWAYS