Posted by Hari on Tuesday, August 12, 2014 with 1 comment | Labels: public sector, transport, unions
SOURCE DAILY MAIL: East Coast Main Line pays the taxpayer a record £235million sparking renewed calls for it to stay nationalised
East Coast Main Line paid a record £235million in profits
back to the taxpayer in its final full year as a state-owned company, a 12 per
cent increase on the previous year. The amount was revealed in its latest set
of accounts and was made up of a £216.8million ‘franchise premium’ and
£18.6million in a dividend payment. This means that the franchise has returned
more than £1billion to the Government over the past five years and the news is
set to spark renewed calls for it to continue to operate the East Coast as a
nationalised railway. It has been run by Directly Operated Railways, a
subsidiary of the Department for Transport, since 2009 when the previous
operator, National Express, handed the franchise back to the Government because
of financial troubles. In spite of opposition from Labour and the Green Party,
transport unions and more than 27,000 signatories to the ‘Keep the East Coast
Main Line public’ e-petition, the Government intends to go ahead with its plans
to privatise the line. An industry observer said that under state ownership,
the East Coast Main line had never received a subsidy, had improved customer
and employee satisfaction ratings, had made significant improvements to the
service and was returning all its profits to the taxpayer. The annual report
for the East Coast Main Line for the year to March 31 showed that overall sales
were £717.5million, up from £692.5million, and pre-tax profits were up from
£7million to £9.5million.
SOURCE TELEGRAPH: Is
Labour's plan for a state-owned rail company too risky?
Jon Cruddas, chair of Labour’s policy review, offers an
insight into the thinking in the party’s senior ranks. “A minefield of
different tickets, rules and routes has left customers feeling like the system
is trying to 'rip them off’,” Cruddas writes. “We have a bizarre situation
where state railways from other countries can bid to run our rail services yet
our own Directly Operated Railway [sic] is unable to bid even to continue
running the line they currently operate, the East Coast Main Line. This doesn’t
add up.” Unions such as the RMT have, for a long time, been calling for the
re-nationalisation of Britain’s railways. As Mr Cruddas’s article suggests, it
is likely that Labour will invoke a sense of British nationalism by pointing
out that train operators owned by foreign governments - Keolis of France, Abellio
of the Netherlands, and Arriva, owned by Germany’s Deutsche Bahn – are enjoying
the benefits of the UK’s liberalised rail market but taxpayers in this country
can’t. What Cruddas fails to mention, however, is that, as well as taking any
profits, those foreign state-owned rail companies are also taking on the risk
of running the railways – a risk that would otherwise sit on the Government’s
balance sheet. As Patrick McCall, the executive co-chairman of Virgin Trains,
explained in a recent interview with this paper, private rail companies commit
to paying the Government premiums based on growth forecasts. If those forecasts
don’t materialise “we have to put our hand in our pocket to make up the
difference”, McCall stresses. There are no guarantees of a profit. And although,
on paper, it sounds great to have a market where private will compete against
public, it is also making a huge assumption that private companies will want to
play on those terms. Transport specialist Douglas McNeill, investment director
at Charles Stanley Direct, says: “Who is going to play a game where your
opponent is a wholly-owned subsidiary of the referee?”
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