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Britain’s rail network—on a fast track to profit

This article is over 1 years, 8 months old
Bosses and the government accuse rail strikers fighting back for job security and pay of being ‘wreckers’. Sam Ord investigates who really profits from this system, how they can be beaten—and how decent public transport can help the fight against climate change
Issue 2810
LNER train in a station

Rail bosses grabs huge profits thanks to privatisation (Picture: Visit Lincoln)

Rail workers have gone into battle against the greedy companies that have wrecked the railways for commuters and ­workers alike. Bosses’ profiteering has led to ­commuters regularly facing delays, cancellations and soaring ticket prices. Workers face stagnant wages, ­worsening conditions and threats of job losses. While working class people suffer from the profit driven rail system, rail chiefs cash in.

Network Rail is described as an “arm’s length” public body of the Department for Transport. Its senior staff deny ­workers an above inflation pay rise, yet they are some of the highest paid public sector bosses. In 2021 Network Rail CEO Andrew Haines took a huge £585,000 annual wage. Chief financial officer Jeremy Westlake grabbed £415,000. Route ­services managing director Susan Cooklin got at least £385,000.

The top ten highest paid people at Network Rail gorge on a total of up to £3.68 million each year. Meanwhile Network Rail is advertising a customer service assistant and a station control assistant jobs that pay just £20,000. Britain’s train network allows millions of people to commute into city centres from rural areas in the most environmentally friendly way. But continuous cuts to routes means people pay more to be packed into sweaty carriages.

This corner cutting means ­infrastructure isn’t modernised and commuters are left stranded or forced to endure rail replacement buses. The Tories and their rail boss mates want a network with fewer staff, no ticket offices or train guards and driver only operated trains. This comes at the cost of undermining safety, leading to potential disasters.

At every turn bosses squeeze out as much profit as possible. That’s why workers are striking back to defend jobs and safety. Since the privatisation of British Rail the average train ticket has increased by 23.5 percent. It means guaranteed profit for the bosses, but the public sector is on hand to save the day when things go wrong. This is what happened during the ­pandemic when the government paid out £11 billion to save the private rail industry.

The renationalisation of public ­services is desperately needed. But ­billionaires like Richard Branson of Virgin Trains and the heads of the 13 train ­operating ­companies under fire from strikers would resist any attempt. Workers hold the power to force this change by withdrawing their labour and demanding control of their workplaces.

The money that bosses grab should be reinvested into the railways. And the grants handed over by the ­government should be given back to workers and infrastructure projects. The rail workers’ strike is a direct challenge to the privatised rail model that prioritises profit above all else. A win for the rail workers would be a blow to the bosses and the Tories who prop them up.

Tories turned running railways into a rich man’s bidding war

British Railways was owned by the state from 1948. It was part of a large number of state run services and industries. Under the Tory government of Margaret Thatcher that came to power in 1979 publicly owned industries were sold off to the rich. Thatcher sold off state owned businesses related to the railways including British Rail Engineering Limited, which was a train building company. She also sold off British Petroleum, British Gas, British Telecom and British Steel.

It was under Thatcher’s successor John Major in 1994 that the railway’s privatisation began. Various regulatory functions were given to the Rail Regulator—an office that regulates the railways. Ownership of the infrastructure now belonged to Railtrack and track maintenance services were sold to 13 companies. Rail privatisation failures come down to passenger trains being owned as rolling stock by companies who lease the trains to train operators. This created a franchising competition. 

The government has a say in where trains operate and when, but train operating companies bid for these franchises. Here they often overpromise and under perform. Bidders expect certain passenger numbers and profits, leading to hypothetical franchise payments. If passengers don’t use the service as expected, profit slows. The company then fails to make the payments it promised in the bidding process, creating a vicious cycle. Great Northern Rail was the first operator of the intercity east coast route and is an example of the disasters of privatisation. It over bid and failed to pay what was owed.

The government forced the franchise into the hands of another private company, National Express, in 2007. But just two years later bosses forecasted too many passengers, over-bid and failed to make payments. National Express lost the service in 2009 and the government temporarily renationalised it. The government organisation was named East Coast and operated until 2013. Stagecoach and Virgin won the bid in a joint venture.

The same happened to them as it did to GNR and National Express. During this period the nationalised service had some successes. East Coast ranked fourth in overall satisfaction and value for money, delays were rarer than the majority of other lines and it made £1 billion that went back to the state. But the Tories are still hell bent on privatising services. They want private firms to run industries and services—and for private sector bosses to reap the profits. To overturn that system requires tackling the whole system of prioritising profit.

Public transport is just the ticket

That means fighting for the end of cars that guzzle fuel, and for domestic flying to be ended. That has to be done alongside a just transition for workers involved and a transport system that serves working class people. But currently a one way ticket from London to Glasgow is over £140 when bought on the day yet a plane ticket a day in advance is £117. To make green and public travel an affordable reality, all public transport must be free and publicly funded.

That also means accessibility for disabled people and consideration for older and young people. This is the best way to increase the use of trains to help slow carbon emissions. There are still battles to be won under the current system, such as switching to electric trains everywhere and fighting for these to be run on renewable energy. Less than 40 percent of British railways are electric, and changing this would also create green jobs. But a free and truly green public transport won’t be a reality under capitalism.

That requires a fight against the forces who profit from travel on the tracks, roads, seas and skies. Beating back the threat of climate change also requires more than just restructuring public transport. The entire system we live under has to be ripped apart to put the planet before profits. For profit to be side-lined ordinary people must rally against transport bosses and their friends sitting in banks, construction companies and Parliament. It is a fight that the rail workers have started but one that all workers must finish.

The fat cats who are cashing in

The 13 train operating companies that workers are striking from are owned by just seven companies. Bus and train operating company Abellio owns Greater Anglia, East Midlands Railway, West Midlands Railway and jointly own Northern Trains with Serco. In 2019 Abellio made a total turnover in Britain of approximately £2.95 billion. Between 2014 and 2018, the Greater Anglia franchise made a profit of £85 million. Instead of reinvesting this money, it paid shareholders £61 million.

East Midlands Railway made over £426 million in revenue in the 12 months to April 2019. British multinational transport company FirstGroup owns Great Western Railway and Transpennine Express. It jointly owns Avanti West Coast with Trenitalia and jointly owns South Western with MTR Corporation. FirstGroup grabbed a profit of £226.8 million in the year ending March 2022. It paid its chief executive Matthew Gregory £840,000 in 2021, up from £788,000 the previous year. 

South Western Railway’s joint owner MTR Corporation paid its managing director £1.18 million in 2018. Avanti West Coast took government money to cope with the Covid pandemic in 2020. With that money it paid £11 million in dividends to shareholders. Meanwhile it outsourced cleaners employed by Atalian Servest. These workers are paid just above the minimum wage and receive no sick pay. Avanti West Coast is also owned by Trenitalia who owns C2C. In 2019 it made £500 million in profit.

Chiltern Railways and Cross Country trains are owned by Arriva. Cross Country Trains handed out £12 million in dividends after grabbing government Covid financial support. Arriva chief executive Dr Manfred Rudhart took an 18 percent pay rise from £1.1 million to £1.34 million in early 2020. There is clearly more than enough money to pay workers fairly and to improve the railways, but it requires the kind of fight that RMT union members have begun. Every working class person should support the strike and show solidarity with the picket lines.

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