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Merchants of greed squeal for more

This article is over 20 years, 3 months old
SOME OF the world's richest and greediest people have launched a squealing campaign to get money from us so they can become even richer. The government has given in to them, and has donated over £700 million to this wealthy gang.
Issue 1771

SOME OF the world’s richest and greediest people have launched a squealing campaign to get money from us so they can become even richer. The government has given in to them, and has donated over £700 million to this wealthy gang.

Railtrack, the privatised railways’ operator, made fortunes for its big shareholders by cutting safety and investment to boost profits. They counted the cash as the shares they had initially bought for £3.60 each soared to nearly £18 each. This price leap was the result of huge public subsides, amounting to over £16 billion, and the fact that the network was flogged off at around a quarter of its real value.

These shareholders grabbed money right to the end. They casually accepted a £138 million dividend payout in the spring at the same time as the company was making a £500 million loss. The money to pay the Railtrack shareholders came straight from the government. Privatisation has led to carnage on the rail, a worse service, higher fares-and super-profits for a few.

Those shareholders should be named and shamed, and they should be made to pay compensation to us. Instead, when Railtrack collapsed last week, shareholders immediately demanded compensation for their ‘losses’. They were utterly outraged that one of their financial gambles could have turned sour.

Share dealing is supposed to be people risking their money in order to gain high profits. This whole sleazy episode has shown that the rich arrogantly demand guaranteed high profits and no risk. They hate any sort of government ‘interference’ such as regulation or taxation. But when a private company goes under they expect ministers to hold their hand while pressing £50 notes into their wallets.

…and New Labour caves in to them

STEPHEN BYERS, the transport secretary, agreed that Railtrack could cash in £370 million it had stashed away from property development profits and hand it to shareholders.

On Monday he also agreed that the ‘potentially lucrative’ licence to run the Channel Tunnel rail link was a Railtrack asset, worth a further £400 million. The campaign to extract money from the government has used sob stories about small shareholders and workers who have lost savings. But it has always been about the greed of big finance houses.

Just a handful of companies own nearly a quarter of Railtrack shares. They are Fidelity Investments (the world’s biggest fund manager), Deutsche Asset Management, Invesco/Perpetual, Legg Mason, Marathon, Morley and Odey Asset Management.

Together with other fat cats they launched a blackmail operation. Bankers and financiers who hold bonds in Railtrack told the Observer that ‘there is precious little chance of City finance for the government’s proposed ‘son of Railtrack’ unless their investments are honoured and the government guarantees the new company’s debt’. Ministers have also handed blackmailing corporations the ammunition to squeeze public funds.

Hospitals, schools, transport and other key services depend on private sector involvement because the government has staked all on PFI, PPP and other schemes. Chris Elliott, head of Barclays Private Equity, a big PFI investor, said last week, ‘Investors will now demand higher returns for lending to PFI projects.’ Paul Boateng, financial secretary to the Treasury, rushed to reassure the financiers. He said, ‘The Private Finance Initiative and Public Private Partnerships are absolutely essential tools for modernising public services.’

He added that PPPs remain ‘part of the solution to the Railtrack problem’. New Labour is not even going to take Railtrack into social ownership and control.

Instead it proposes that a new private company will take over from Railtrack. This will allegedly be ‘not for profit’, but will be driven by the same business pressures as the privatised railways. Its board will be made up of representatives of the train operating companies, such as Virgin and South West Trains, plus other businessmen and perhaps a token union rep.

Another alternative under consideration is to hand the whole operation to Virgin or Stagecoach, or West LB. The solution to the ‘Railtrack problem’ is simple-renationalise the entire rail industry with not a penny for the shareholders, and get the fat cats out of public services.

False friends

THERE HAVE been press reports that some members of the RMT rail union want to ballot for industrial action in order to get the money back for their Railtrack shares.

Workers were certainly conned when they were handed the shares instead of wages. But the solution is to demand a decent living wage and to have the railways fully publicly owned, with decisions made by representatives of workers and passengers.

Workers should also recognise that the papers now suddenly pressing ‘the workers’ case’ are false friends. The Daily Mail devoted pages last week to signal workers who had lost money as a result of Railtracks collapse. This is the same paper which bitterly attacked the ‘greed’ and ‘pointless disruption’ by signal workers when they went on strike for a decent wage in 1994.

The tracks are getting worse

RAILTRACK has left the railways in an even worse condition than they were before the horrendous Hatfield rail crash where four people died almost a year ago.

A quarter of the new switches and crossings, which allow trains to move between lines, are showing signs of gauge corner cracking. This is the defect which caused Hatfield.

The track is so bad that there are 690 speed restrictions in place on railways compared with 540 before Hatfield.


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