THE spectacular collapse of Railtrack ought to be the final nail in the coffin for privatisation. Shareholders were screaming for compensation this week. And Railtrack was threatening legal action to free up £350 million to hand to them.
Trade and industry secretary Stephen Byers was rightly refusing to hand yet more money to grasping shareholders. But the New Labour government is pushing on with privatisation, not least with a Railtrack-style scheme for the London tube. The excuses from big business and privatisation maniacs in New Labour are flowing fast. Railtrack was 'a botched privatisation', they claim. The problem, however, is the whole idea of selling public services off to companies.
Stephen Byers's intervention to prevent the collapse of the company is a recognition of that, but also an attempt to keep the ideology of privatisation intact. Byers has not 'renationalised Railtrack', as much of the press has claimed. He has stepped in to keep a bankrupt company trading while another consortium is cobbled together to run the infrastructure of the railways. New Labour ministers say they will 'honour' Railtrack's £3.3 billion debts. That money is owed to banks and corporate investors. Bonds issued by Railtrack will also be honoured.
The corporations that have benefited from the billions of public subsidy Railtrack has received will again be featherbedded now the company is bankrupt. And Byers's scheme for replacing Railtrack will put another group of privateers in charge-bosses from the companies that run train services.
The Tories sold off Railtrack in 1996 for £1.8 billion-less than a quarter of its true value. That allowed a small number of people to become millionaires overnight. The same is true for the other rail companies. Just three men became multimillionaires through buying up shares in the Porterbrook rail company and then selling them off when the price rocketed. Huge public subsidies propped up those companies, just as they did for Railtrack. The government is promising to change none of this.
It says it will pump £30 billion of public money into what remains a privately owned industry over the next ten years. Its obsession with privatisation means it will not have control over the company that is to replace Railtrack.
Rail expert Christian Wolmar writes, 'Railtrack will become a private company with no shareholders, and profits will be reinvested. But in order to keep the railways out of Gordon Brown's precious public sector borrowing requirement, the government will not be able to appoint its directors or exercise day to day control. Rationally, the government should have just renationalised Railtrack.'
New Labour has gone through one excuse after another over the last four years to avoid renationalising the rail industry. It promised a 'publicly accountable, publicly owned railway' before the 1997 general election. Then Tony Blair said renationalisation would be too expensive. The government promised the private rail companies more in public subsidy than it would have cost to buy them out.
Then Railtrack's share price plummeted after last year's Hatfield crash. The government still said renationalisation was too expensive because shareholders would have to be compensated 'at the average price of the last three years'.
Now Railtrack has gone bust (but its property speculation arm, Railtrack Group, is still trading) big business is getting compensation, and the network is still not publicly owned, let alone the trains. And New Labour's plan for the construction projects Railtrack has botched is to sign yet more Public-Private Partnership deals.
These will involve companies such as Balfour Beatty, which failed to maintain the track at Hatfield. Every trade union leader should be mobilising to kill off privatisation.
Companies in crisis
RAILTRACK IS not the only major privatised company in crisis. British Airways, BT, Powergen and Scottish Power are all in trouble. They were all key parts of the Tories' privatisation crusade.
They were supposedly going to be more efficient, with profits shared out to millions of ordinary people in a new 'people's capitalism'. Instead they now all face catastrophic losses. So too do companies such as Telewest and NTL, two private cable networks set up to create artificial competition with BT.
The profits of the last few years have not been shared out. They have gone to big business and a tiny number of major shareholders. Now some ordinary people risk losing all after they were conned into buying shares. And thousands of workers are threatened with the sack. Thatcher's dream has turned sour. Yet New Labour continues to believe in it.