Reblogged from Michael Meacher MP:
The latest figures show that a season ticket, including tube travel, from
Woking in Surrey to central London cost £3.268 last year. A similar 22-mile
journey in Italy from Velletri to Rome cost just £336. In France the 24-mile
journey from Ballancourt to Paris costs £924. The RMT argues that the vastly
higher costs of rail travel in the UK largely reflect the fragmentation of the
rail system into a myriad pieces. Removing complex interfaces, transaction
costs, increased debt servicing and private profit, and dividend payments from
the industry could save more than £1bn a year, leading to lower fares and less
public subsidy. Altogether they believe that since privatisation more than
£11bn of public funds hsve been mis-spent on debt write-offs, dividend payments
to private investors, fragmentation costs , including profit margins of complex
tiers of contractors and sub-contractors, plus higher interest payments to keep
Network Rail’s debts off the government’s balance sheet. Not a way to run a
railway.
The Tory rationale for privatisation – that it would be more efficient – has
been shown unequivocally to be false. State subsidies since the system went
private have more than doubled. On the East Coast mainline two previous
private operators have collapsed. But the service then run directly by the
State has been strikingly successful. Directly Owned Railways significantly
improved pre-tax profits, increased passenger journeys, and raised customer
satisfaction and punctuality performance.
The record of other privatised industries is also remarkably poor. Some 24
years after the water industry was privatised in 1989 by Thatcher, a quarter of
all the water distributed – 3.4bn litres a day – is lost through leaks. During
those 24 years the level of leaks nationally has been reduced from 30% by just
5%. By contrast, in Germany, where the water utilities remain under the public
control of the municipalities, leaks are below 10%. In 2006 Thames Water was
leaking 900 mega litres per day. and having failed to improve on that for the
third year running, it was fined. That didn’t however stop Thames Water from
declaring a 31% rise in pre-tax profits to £347 millions. Across Britain as a
whole the average water bill has risen by £64 since 2001 and is now £376 a year,
but the companies collectively have made £2bn in pre-tax profits and paid out
£1.5bn in dividends to shareholders in 2010-11. A customer rip-off and a
bonanza for management and shareholders.
The same applies in other privatised areas, especially in energy markets such
as electricity where wholesale costs have fallen 40% since privatisation, but
the consumer has only seen a 25% cut. That can be replicated elsewhere,
notably in petrol prices. For very good reasons privatisation is not popular.
Why doesn’t Labour exploit that?
