The government has pressed ahead with privatisation of the East Coast Mainline precisely because of its success.
The government has pressed ahead with privatisation of the East Coast Mainline precisely because of its success
It should be obvious by now that privatisation has become an end in itself for this government. This was demonstrated last year by the rushed privatisation of Royal Mail, sold at a fraction of its worth despite bringing in a significant profit to the taxpayer as a state-owned company.
We are told that we live in straightened times where government money is hard to come by; and yet state-owned companies that are making not insignificant sums for the exchequer are hastily being taken off the books and handed to the private sector. In these supposedly non-ideological times ideology is regularly trumping pragmatism.
The latest example of ideologically-driven stupidity is the flogging off of the successful East Coast Mainline to a consortium made up of Virgin and Stagecoach. Despite the not-for-dividend operator returning some £800 million to the taxpayer in the last financial year, the government has been seeking to return East Coast to private hands as speedily as possible. Today they’ve finally done it.
The absurdity of selling off East Coast was summed up last year by former minister for transport Sadiq Khan, who pointed out that, without privatisation, the money made from line could be reinvested ‘for the benefit of passengers’ – as opposed to shareholders of course.
And at a time of poor train services and huge subsidies for private rail providers, since the East Coast Mainline was taken into government hands not only has it returned the service to profit but it has simultaneously delivered a high level of customer satisfaction, as these excellent graphs from Ripped-Off Britain demonstrate:
The scale of East Coast’s success is all the more impressive considering the service was previously abandoned by a failing private sector – first by GNER in 2007 and then by National Express in 2009. Just as the government cannot allow banks that are ‘too big to fail’ to sink without trace, so it could not permit the companies that run our trains to fail – the consequences would be just too severe. As should be obvious to even the most fanatical libertarian, the railways can’t be turned off for a week on the ideological basis of ‘letting the market run its course’.
Along with it’s other achievements, the success of the East Coast Mainline has also rubbished the idea popularised by big business that success requires eye-watering rewards. According to their annual report, East Coast’s CEO earned £224.8k in 2013. If this sounds a lot, consider that the average pay of a FTSE 250 CEO stands at £1.3 million – and that’s before bonuses kick in.
This helps to explain why wrestling the railways out of private hands is a vote winner. According to recent opinion polls, over half the British public support full nationalisation of the railways. Even Conservative supporters want to bring the railways back into public ownership, with a majority saying that they would prefer nationalisation to the status quo.
Yet despite all of this the government has decided to press ahead with the sell-off of the line. Although I suspect it’s more revealing to interpret this in another way: the government is pressing ahead with privatisation precisely because of the success of the East Coast Mainline.
Is there anything, after all, that’s more damaging to the Conservative privatisation agenda than an example of a people before profit service that actually works?
James Bloodworth is the editor of Left Foot Forward. Follow him on Twitter
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39 Responses to “The success of East Coast shows that another model can work. And that’s why it terrifies the government”
blarg1987
How is it a problem to sue a minister if there is evidence of corruption?
MP’s can not claim parliamentary privilege if there is evidence of them breaking the law.
And to be honest you will sue them after they have left office and taking up their post as a non executive director on a company that won the contract they were in charge of letting.
Gegenbeispiel
While I oppose privatisation vehemently, it’s not at all ironic that the contract went to the Continent. Railways are, like most industries, engineering driven and dominated and engineering is far more respected on the Continent than in UK. Etonian toffs committed to upholding tradition, manners and unwritten rules are hardly good material for that.
Leon Wolfeson
Basically, the British constitution. It may be corruption in your view, but there’s little a minister can do which is actually criminal as long as he’s acting within the scope of his mandate.
And retrospectively? No, can’t see a case at ALL.
Leon Wolfeson
Oh that’s your name is it? k….so, Gooby, why are you asking yourself questions?
And no, see, unlike you I don’t think I’m Superman. I just know something about the UK’s constitution, since it’s of interest to me.
Nick London
So you know about judicial review processes? Quick pass the Wikipedia. Lectures are all about prep g.