RAIL FRANCHISING HAS FAILED

www.rmt.org.uk :: december 2006 :: RMTnews RMT has called on the government to impose an immediate moratorium on rail franchising after MPs condemned the failure of a fundamentally flawed system that delivers only fragmentation. The House of Commons transport select committee report into 'Passenger Rail Franchising', damned the system introduced under privatisation as "a complex, fragmented and costly muddle". On behalf of the select committee, Gwyneth Dunwoody MP said that franchising had delivered only fragmentation and short-term thinking and that no amount of tinkering can resolve the fundamental flaws in the system. “In the current system, the government tries to entice bidders into promising ever greater premiums, but in return, it has to underwrite virtually all the risks to which operators are exposed. “At the end of the day, passengers will pay the price when operators cut service levels or hike fares to pay the premiums, and taxpayers will foot the bill when operators default or walk away from their contracts,” she said. SUBMISSION In its submission to the committee, RMT had also argued that the current franchising arrangements had failed to provide value for money for the tax-payer and the fare-payer. The union said that the franchise awards are shrouded in commercial confidentiality and the franchising process has cost the public purse over £60 million since 1998. It went on to argue that the commercial risk was not borne appropriately by the train operators, who made operating profits of £306million in 2004/05. Following the report, the union called for the tendering for the East and West Midlands and new Cross-Country franchises to be shelved. It also called for the failing franchise GNER to be brought back in-house while ministers chart how to bring all the franchises back under proper public control. RMT general secretary Bob Crow said that the report highlighted the nonsense of a set-up in which private operators keep siphoning profits with little financial risk. “The current system has handed guaranteed, risk-free profits to private operators who are demonstrably less efficient than British Rail and incapable of delivering the growing railway that Britain needs and our environment craves,” he said. PUBLIC OWNERSHIP John McDonnell MP, Chair of the RMT parliamentary group, welcomed the report and said that only public ownership of the railways could ensure the necessary long-term planning and efficient running of the rail network. "The railways have an important role to play in the UK meeting its environmental obligations and in reducing social exclusion - it cannot be left to the market, which has only led to massive profits for a few and fare rises for the many,” he said. Labour Party conference has already voted to bring the railways back into public ownership - in line with public opinion. John said that the government must listen to party members, rail unions, the travelling public and the transport select committee and end this failed Tory experiment with privatisation. Bob also pointed out that rail investment was more than three times more expensive than it was in BR days, while train services are less reliable and more expensive than anywhere else in Europe. “Ministers rightly responded to the stark warnings in the Stern report by talking about setting statutory targets to carbon emissions. “If the railways are to play their role in helping us to meet them we must have a growing, joined-up railway with affordable fares and attractive services that encourage people out of their cars and onto trains,” he said. The report should serve as a warning to the mayor of London of the folly of going ahead with the privatisation of the East London Line. RAIL FRANCHISING HAS FAILED RMT calls for moratorium on ‘failed’ rail-franchising system following damning parliamentary report Campaigning Labour MP John McDonnell 11