It was New Labour's day of shame this week. The government gave in to pressure and handed £500 million to some of the greediest and richest people in Britain. Businessmen, bankers and speculators were horrified when their Railtrack shares nosedived last year. They believed their bets in the stock market casino should be a one-way ticket to wealth. These people were gleeful when the Tories flogged Railtrack off for a quarter of its value.
They eagerly grabbed huge profits from government subsidies of around £16 billion and clawed back money spent on safety. Yet when Railtrack collapsed they demanded that New Labour bail them out. At first transport secretary Stephen Byers promised 'no taxpayers' money' would be given to Railtrack shareholders. But this might have rocked City confidence in PFI projects and the rest of the government's privatisation drive.
So this week Byers handed over £500 million of our money to shareholders. They will get a £300 million government grant and a £200 million loan from banks which the government will guarantee. Network Rail, the successor company to Railtrack, has also got an incredible £9 billion to buy out Railtrack's shareholders and bondholders. If it does not repay those loans taxpayers will fund the gap.
Network Rail deputy chairman Adrian Montague admitted that the deal will be 'more expensive' than simply renationalising the railways. Ian McAllister, Network Rail's chair, used to be the boss of Ford UK. He is confident that Network Rail can attract new investment, because 'we have substantially de-risked the business'. McAllister will be able to handpick a panel to choose 'the public interest' members of Network Rail.
It won't be 'small shareholders' who gain. Big institutions hold more than two thirds of Railtrack's shares. A handful of companies hold one quarter of the shares. They include Fidelity Investments, Deutsche Asset Management, Invesco/Perpetual, Legg Mason, Marathon, Morley and Odey Asset Management. Yet on the same day these parasites were stuffed with money, New Labour also passed a death sentence on 15,000 postal workers' jobs-with another 25,000 job cuts to come.
How can mass sackings make a struggling service better? Who believes that closing depots and Post Offices, scrapping deliveries and prioritising business mail will really help? No wonder Labour backbenchers were calling it Black Monday.
New Labour would rather grovel to the City than stick to its promises to the rest of us. It would rather give money to the rich than use it to improve transport. Blair's project is causing huge anger. Let's build the socialist opposition to New Labour.