Tuesday 12 August 2014

Tuesday, August 12, 2014 Posted by Hari 1 comment Labels: , ,
Posted by Hari on Tuesday, August 12, 2014 with 1 comment | Labels: , ,

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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