NEW STUDY EXPOSES GREAT RAIL RIP-OFF

The report reveals that train- operating companies’ combined income has risen by 26 per cent since privatisation and that fares have risen by 24 per cent – well ahead of inflation. The analysis of the TOCs’ accounts by Manchester Business School Professor Jean Shaoul shows that profits have been boosted by record levels of subsidy – £1.8 billion in 2003- 04 – as well as by cuts in staffing levels and a pay squeeze. “This report shows that taxpayers, fare-payers and railway workers are being mugged by profiteering privateers whose sole aim is to maximise profits and payouts to shareholders,” RMT general secretary Bob Crow said at the launch of the report at this year’s TUC Congress in Brighton. “Massive amounts of public money are going into the industry, but the private sector is leeching it out again as profits and handing their parent companies and shareholders massive dividends while services are still worse than in British Rail days. “Today we heard a speech from Gordon Brown as prime minister-in-waiting. If he is serious about improving public services and delivering value for money he should announce his intention to stop the re- privatisation of South Eastern Trains and bring all the train operating companies back into the public sector. “In public hands SET is delivering a better service for a million pounds a month less subsidy. That is a public-sector success story and should be the blueprint for bringing all the TOCs back in-house,” Bob Crow said. MAIN POINTS OF THE REPORT • The combined total income of train operating companies, including both fare revenues and public subsidies, rose by 26 per cent from 1997 to 2003, from £4.8 billion to £5.8 billion. • Passenger fares rose by some 24 per cent over this period, faster than the rate of inflation. Although a "cap" was intended to keep fare rises below inflation, this only applies to some ticket types. Companies have compensated by pushing up the price of other journeys. • Labour costs have been cut by reducing staffing levels and allowing wages to fall behind average earnings. This is likely to have been a key factor explaining the poor performance record of the private operators, since British Rail's workforce was already the most productive of any rail service in Europe. • Subsidies allowed companies to pay dividends of £160 million to their parent companies in 2003, an exceptional post-tax return on equity of 174 per cent. • Since privatisation at least £890m has been taken out of the industry in dividends paid to parent companies. Without public subsidies, the train operators would have made a loss every single year. Professor Shaoul also warns that the new Railways Act, the government's latest attempt to bring rail spending under control, will simply "presage closures and fare hikes" unless the costly fragmentation and profiteering resulting from privatisation is addressed directly. In September 2004 an overwhelming majority of constituency and union delegates at the Labour Party's annual conference voted to adopt a policy committing Labour to "resolving the fragmented structure of the industry by introducing an integrated, accountable and publicly owned railway", but this decision has yet to be reflected in government policy. The government is currently considering bids for the South Eastern franchise, which has been run in the public sector since Connex was removed in 2003 and has achieved notable performance improvements and cost savings in that period. The Performance of the Privatised Train Operators, a study by Professor Jean Shaoul published by Catalyst. For more information contact the Catalyst office on 020 7733 2111 or visit www.catalystforum.org.uk. RMTnews :: october 2005 10 LAUGHABLE: Veteran campaigner Tony Benn uses humour to outline the irrational nature of rail privatisation and the need for democratic control and public ownership of this essential public service at the launch of the Catalyst report at TUC Congress. NEW STUDY EXPOSES GREAT RAIL RIP-OFF Train operators’ record profits are siphoned from public subsidy, a perpetual squeeze on rail workers’ pay and above-inflation fare rises, according to a new study from the Catalyst think tank