9 March 2018
We’ve been emailing MPs for a few weeks now about the bailout of Virgin Trains East Coast (VTEC). Thanks so much for all the time and energy you have put into contacting your MPs and forwarding their responses! We say this all the time, but we really couldn’t do this without you.
We’ve seen quite a few responses from Conservative MPs, which all look suspiciously similar, so we decided to pull out some of their arguments and respond.
They say that this is not a bailout because Stagecoach and Virgin will not receive any money from the government, and because VTEC have lost £200m while running the franchise. We say that allowing VTEC to get away without paying the premium payments they promised - the size of which were based on their own predictions of their profit when they bid for the franchise - is a de facto bailout.
Letting VTEC get away with overbidding, failing, and then not paying their premiums, means that other train operating companies will be encouraged to do exactly the same. This could mean that the public purse loses tens of billions over the next few years through similar overconfident and failed rail franchises.
They say that privatisation has been good for our railways, citing increased passenger numbers and investment. We say that there are plenty of explanations for an increase in passenger numbers. Cars are becoming less popular, and more people need to commute to work in cities than in the 90s.
Most importantly, the government invests far more each year in the railways than private companies do - again, the public purse takes the hit, and private companies reap the profit. The new Azuma trains that Richard Branson boasts about are part of a £5.7bn government funded project to improve intercity travel in the UK - they are not Virgin's responsibility.
They say that they Grayling will choose the option that is ‘best for taxpayers and passengers’. That’s great - we want that too! Public ownership is the best option for taxpayers and passengers because it would save us money - £1.2bn per year - which could fund an 18% cut in fares. Public ownership also means less fragmentation - and more coordination, which means fewer and shorter delays on the line, consistent standards across the network, and more services in less ‘profitable’ areas who desperately need more trains.
We need to make sure that Chris Grayling makes the right decision on the East Coast franchise. If you’ve written to your MP already and received a negative response, would you consider sharing the action with your friends and family who may live in different constituencies?