We told you so! Reprivatised East Coast needs government bailout

30 November 2017

The notorious East Coast mainline, which was brought into public ownership in 2009 after National Express failed to make a profit, and then controversially reprivatised in 2015, has run into trouble again.

The new owners, Virgin and Stagecoach (who operate together as Virgin Trains East Coast, or Vtec for short) have, surprise surprise, failed to make the profit they expected from the franchise.

Instead of bringing the East Coast back into public ownership, where it could be run for passengers, not profit, Transport Secretary Chris Grayling has offered Vtec a huge bailout and agreed to end the contract three years early.

This means that Vtec will pay millions less to the UK government than it initially promised.

We could have saved them the trouble if, back in 2013, the government had listened to us and other campaigners, and kept East Coast public! Between 2009 and 2015, the publicly owned East Coast line had a 91% customer satisfaction rate, required much less public subsidy, paid back £1 billion to the Treasury and was the most efficient franchise in the UK.

Lord Andrew Adonis, who was responsible for bringing East Coast into public ownership back in 2009, has spoken out against the plan. He says that other rail companies will now be expecting the same treatment.

This means that companies hoping to run rail franchises will place unrealistically high bids, knowing that if and when they don’t make the profit that they promise, they can just back out of the contract and the government (in other words, taxpayers) will foot the bill.

If our railway was run in public ownership, we'd save £1.2 billion a year, enough to fund an 18% cut in rail fares. That's because we wouldn't be wasting money on shareholder profits, fragmentation and a higher cost of borrowing. Why should our taxes be gifted to failing rail companies on top of that? Not to mention the government subsidies that Britain’s railways rely on.

This is a dangerous and expensive precedent for Chris Grayling to set. We know that public ownership works for our railways - it did before and it will again. Let’s bring East Coast into public ownership, before the next private franchise ends in disaster.

(The picture shows Cat Hobbs, Lilian Greenwood MP, Manuel Cortes from the TSSA union, the late Bob Crow from RMT union, Green Party leader Caroline Lucas MP and Ellie Harrison from Bring Back British Rail, outside Parliament campaigning to keep East Coast public back in 2013.)

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Comments

Roderick Smith replied on

Rail travel is a monopoly and should be owned by those who fund it. Us.

Rosaleen Lofnes replied on

This is disgraceful. The fares have been put up too. Public ownership should be the only option considered

Michael Renney replied on

This is sheer robbery of the public purse. Yet again an indictment of a government who run things by dogma regardless of it’s cost to the country.

gwen couchman replied on

This is my hard earned money . my tax , stop giving it to millionaires ,and as these franchises fail bring them back into public ownership , at least then the country will benefit , not share holders who avoid paying their fair share of tax . . Bailing them out for failing . as a teacher . no-one would have bailed me out had I failed at my job . Stop wasting our hard eared cash .

Tom Norton replied on

This is a classic example of Conservative policy failure due to their obsession with the private sector in an important industry that fails to work efficiently or fairly outside public control.

D Wraith replied on

I'm absolutely incensed! If privatisation means anything at all, it means that the Companies have entered into a contract, and if they have lost money because they have overbid, - Tough!!!

We should NOT have to pay, and the dividends they have agreed to pay should still be paid into the public purse.

Iain Hoy replied on

With the latest news that Virgin is planning to ask the government for a 2 Billion pound bail out. Just goes to show, that they are unable to fulfil the terms of the contract. If we are expected to hand out that amount of money, the answer should be a resounding NO. Private enterprise has once again shown that they are unable to operate public services without having their hands held.

Sarah Medlam replied on

We need at least one company in public ownership as a benchmark. When East Coast was in public hands it was a great success, but dogma required that it be privatised. That has failed, but still there is a refusal to take the practical view - the one that is clearly in the interest of everyone in Britain, travellers or taxpayers.

David Hill replied on

What else do you expect from alleged entrepreneur Branson who has made billions from taxpayers (eg Northern Rock/virgin Money, NHS/Virgin Healthcare,BT/Virgin Mobile, BR/ West Coast Mainline etc etc. I could go on about this odious parasitebut I feel ill just thinking about him.

Ian mcintyre replied on

This is the first time i have joined a protest group. I feel so strongly that some civil servants have screwed up so badly but no consequences it would appear. Southern rail? I rest my case.

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