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Profit hungry firms want more money for failing transport system

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Issue 2710
The Privatisation of our transport system has been a complete failure
The Privatisation of our transport system has been a complete failure

The coronavirus crisis has underlined the utter failure of a privatised transport system.

But the Tories are still shovelling billions to profit-hungry firms rather than renationalising the system.

The government has already approved £3.5 billion in extra cash for private rail companies.

But the fat cats want more. They are in talks about “emergency” measures that are due to expire in September being extended for a further 12-18 months.

One rail executive arrogantly demanded that the government must “provide continued stability”, warning it will take time to “get revenue levels back to where they were.”

In March, the government suspended the rail franchise system. Even the Financial Times says this was “effectively nationalising any losses by train companies for six months”.

The deal transferred all revenue and cost risk to the state, but with train operators running services for a management fee.

The scale of the bill facing taxpayers as a result of the deal was disclosed in a parliamentary written answer this week by Chris Heaton-Harris, the rail minister. “Since the outbreak of Covid-19, the government has approved £3.5 billion of additional expenditure,” he said.

Transport services increase, alight here for intensive care
Transport services increase, alight here for intensive care
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Tony Travers, a professor at the school of public policy at the London School of Economics, said the final handout to firms could reach £6 billion.

Travers added, “And then there will be further questions about how much more support the industry needs if passenger volumes do not return to normal.

Even before the pandemic, the rail franchising system was in crisis. In March the government nationalised the Northern Rail franchise, having taken over the East Coast line in 2018.


This was the first time two franchises had been in government hands since the privatisation of the railways 30 years ago.

Alexander Jan, economist at the engineering consultancy Arup, said this “probably marks the end of the line for the franchising model as we’ve known it for the best part of 30 years.”

Instead of supplying a further huge bailout for private firms, the government must be pressured to take them all back into democratic public ownership.

The RMT transport union general secretary Mick Cash said, “The government must come clean about its plans for the future of our railways as these backroom deals to prop up and bail out Train Operating Companies simply cannot continue for the long term.

“Rail privatisation is a failed ownership system and it’s clear that these fat cat train operators can only survive a major crisis with the government bailing them out with billions of pounds of taxpayers’ money.”

“It’s time the government used that money to invest in our railways and bring them under public control rather than keeping the failed system of privatisation on life support.”

Ministers are meanwhile drawing up plans to provide bus companies with a second funding injection —adding to £397 million provided for the first three months of the crisis.

All these private firms make vast profits when the system is booming and then come crying to the state for support when there are problems. And the Tories shower them with cash.

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