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Rail franchises money for old rope Rail franchises money for old rope
(3 months later)
The Centre for Research on Socio-Cultural Change (Cresc) study which informed the critique of railway subsidies illustrated the massive transfers to all train operating companies (I once called Richard Branson a carpetbagger. The truth is, he is even more subsidy-hungry than I thought, 11 June). Taxpayers continue to give the rail industry about £4bn per annum and the franchise system is not fit for purpose. The investment by TOCs may not be guaranteed to yield returns but, should TOCs make a loss, they have the right to walk away with minimal penalties. This represents an investment where risk is underwritten by the government, but rather than returning the profit to our cash-strapped government, Virgin Trains pocketed £500m over a 10-year period.The Centre for Research on Socio-Cultural Change (Cresc) study which informed the critique of railway subsidies illustrated the massive transfers to all train operating companies (I once called Richard Branson a carpetbagger. The truth is, he is even more subsidy-hungry than I thought, 11 June). Taxpayers continue to give the rail industry about £4bn per annum and the franchise system is not fit for purpose. The investment by TOCs may not be guaranteed to yield returns but, should TOCs make a loss, they have the right to walk away with minimal penalties. This represents an investment where risk is underwritten by the government, but rather than returning the profit to our cash-strapped government, Virgin Trains pocketed £500m over a 10-year period.
The rebuttal by Richard Branson (Comment, 21 June) cites rising passenger numbers and customer satisfaction as indicators of success. As the Cresc report makes clear, passenger numbers reflect many factors: economic growth; population levels; cultural attitudes to car travel; and the greater need to commute to work as house prices have risen so significantly. There is thus no way these figures can be claimed to signify Virgin's success. Customer satisfaction is hard to decode, but just 59% of passengers viewed their tickets as value for money in 2012.The rebuttal by Richard Branson (Comment, 21 June) cites rising passenger numbers and customer satisfaction as indicators of success. As the Cresc report makes clear, passenger numbers reflect many factors: economic growth; population levels; cultural attitudes to car travel; and the greater need to commute to work as house prices have risen so significantly. There is thus no way these figures can be claimed to signify Virgin's success. Customer satisfaction is hard to decode, but just 59% of passengers viewed their tickets as value for money in 2012.
The franchise system is indefensible and the ownership of TOCs, the network and rolling stock form a convoluted and expensive mess. But there is a much wider issue here. If we have to accept cuts to public services and social security, which are funded by government in a transparent and direct manner, why are private companies continuing to get money for old rope? The complex and secretive nature of these arrangements are part of a larger picture: the privatisation of welfare capitalism. This government increasingly rewards private companies for taking on responsibilities formerly borne by the state, and as state duties required no "profits". The old argument that private sector management is essential to improve performance is tired and unsubstantiated. There needs to be a debate both around the purposes and ownership of rail in the UK but also about the contracting out of welfare provision, in its broadest sense, by government.
Dr Donna Brown
School of Management, Royal Holloway, University of London		The franchise system is indefensible and the ownership of TOCs, the network and rolling stock form a convoluted and expensive mess. But there is a much wider issue here. If we have to accept cuts to public services and social security, which are funded by government in a transparent and direct manner, why are private companies continuing to get money for old rope? The complex and secretive nature of these arrangements are part of a larger picture: the privatisation of welfare capitalism. This government increasingly rewards private companies for taking on responsibilities formerly borne by the state, and as state duties required no "profits". The old argument that private sector management is essential to improve performance is tired and unsubstantiated. There needs to be a debate both around the purposes and ownership of rail in the UK but also about the contracting out of welfare provision, in its broadest sense, by government.
Dr Donna Brown
School of Management, Royal Holloway, University of London
• Aditya Chakrabortty and Richard Branson exchange salvos about whether privatisation has been good for the taxpayer and the railways. But both missed the point of the tens of thousands of jobs lost in British manufacturing in rail-related industries. Track manufacture and maintenance expertise was sacrificed regardless of the impact on safety. Locomotive-, coach- and wagon-making went abroad as foreign suppliers could cut prices and develop their products, being assured of the support of their own nationalised rail-carriers, and in the knowledge that the UK market would be wide open once UK manufacturers disappeared for good. Privatisations in Britain have indeed been extremely successful, not for the taxpayer or for UK PLC, but for foreign manufacturers world-wide and the offshore tax havens which see the profits of the service companies living off the UK tax payer's largesse.
Robert Straughton
Ulverston, Cumbria		• Aditya Chakrabortty and Richard Branson exchange salvos about whether privatisation has been good for the taxpayer and the railways. But both missed the point of the tens of thousands of jobs lost in British manufacturing in rail-related industries. Track manufacture and maintenance expertise was sacrificed regardless of the impact on safety. Locomotive-, coach- and wagon-making went abroad as foreign suppliers could cut prices and develop their products, being assured of the support of their own nationalised rail-carriers, and in the knowledge that the UK market would be wide open once UK manufacturers disappeared for good. Privatisations in Britain have indeed been extremely successful, not for the taxpayer or for UK PLC, but for foreign manufacturers world-wide and the offshore tax havens which see the profits of the service companies living off the UK tax payer's largesse.
Robert Straughton
Ulverston, Cumbria
• Your readers would have to download a 160-page report from an academic website if they want to understand the mechanics of how and why Network Rail's low track access charges create profits for the TOCs. If we are to build broadly based political understanding of how private interests take advantage of the state, the Guardian needs to give more space to extended analysis of issues such as public-private partnership and privatised sectors such as rail. That means more resources for your own trouble-making journalists like Simon Bowers on corporate tax avoidance; plus support for the kind of digging necessary to refute the half-truths in press releases from trade associations and in the self-promotion of business leaders.• Your readers would have to download a 160-page report from an academic website if they want to understand the mechanics of how and why Network Rail's low track access charges create profits for the TOCs. If we are to build broadly based political understanding of how private interests take advantage of the state, the Guardian needs to give more space to extended analysis of issues such as public-private partnership and privatised sectors such as rail. That means more resources for your own trouble-making journalists like Simon Bowers on corporate tax avoidance; plus support for the kind of digging necessary to refute the half-truths in press releases from trade associations and in the self-promotion of business leaders.
On civil liberties issues such as electronic surveillance, the Guardian is doing a great job providing analysis for readers to understand what GCHQ and the US are up to. But on economic issues about private profits at public expense, they cannot understand what's going on by reading the business journalism in any British broadsheet newspaper.
Professor Mick Moran
University of Manchester Business School		On civil liberties issues such as electronic surveillance, the Guardian is doing a great job providing analysis for readers to understand what GCHQ and the US are up to. But on economic issues about private profits at public expense, they cannot understand what's going on by reading the business journalism in any British broadsheet newspaper.
Professor Mick Moran
University of Manchester Business School
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