Home » News/Views » Rail: we’re propping up foreign governments

Rail: we’re propping up foreign governments

An East Coast train stops at Leeds. Photo Workers.

More than two-thirds of Britain’s rail network is now run by foreign state-owned companies – given to them not just by Westminster, but the false nationalists in Holyrood as well…

Rail union RMT has highlighted that 20 of Britain’s 27 so-called private passenger rail contracts are run by foreign state-owned railways – mainly from France, Germany and the Netherlands.

Germany is the biggest of these. Its state-owned Deutsche Bahn (DB) runs Cross Country, Chiltern and Arriva as well as the Tyne & Wear metro, and holds a half share in London Overground. RMT exposed the British government’s agenda by quoting a German transport ministry spokesperson who said, “We are skimming profit from the entire Deutsche Bahn and ensuring that it is anchored in our budget – that way we can make sure it is invested in the rail network here in Germany”.

In other words, DB receives massive subsidies from British taxpayers, makes massive profits, and is completely open about investing those profits in Germany’s railways.

Subsidising Germany

Mick Cash, RMT’s newly elected general secretary following the death of Bob Crow, said, “The true scale of the way the railways here in Britain are being used as a cash-cow to hold down fares and improve services across the rest of Europe will shock passengers as they prepare for another week of being crammed into creaking cattle trucks while being bled dry when they pay for their ticket.

“With the planned reprivatisation of the East Coast Mainline by this rotten Government we are rapidly heading towards a situation where almost the entire train operation in Britain is in the hands of overseas companies sucking out profits to benefit their own domestic transport services.”

“We are skimming profit from the entire Deutsche Bahn […to invest in] the rail network here in Germany.”

RMT exposed this scandal following the recent announcement that yet another franchise, in this case ScotRail, would be run by Abellio from 1 April 2015. Abellio is owned by NS, the Dutch state rail company. RMT noted that NS will soon run a rail network in Britain that is two-and-a-half times bigger than the one in the Netherlands! (See Rail: SNP sells out to Dutch.)

RMT also highlighted that the British government and now the SNP so-called Scottish government are happy for Britain’s railways to be state owned as long as it is by any state but Britain. They pointed out that the British state-owned operator of East Coast was not allowed to bid for ScotRail, or come to that for the new East Coast franchise, the winner of which will be announced shortly.

Eurostar, the international passenger operator running services through the Channel Tunnel, has joined with Keolis as one of three bidders shortlisted for the
franchise. Keolis is 70 per cent owned by SNCF, the French state railway. The other bidders are a joint Virgin/Stagecoach bid, and the hapless FirstGroup. FirstGroup is rapidly losing ground to foreign operators; it has just handed Thameslink services through London to a SNCF-led company, and is now to lose ScotRail to the Dutch.

On 14 October, the British government announced the planned sale of its large stake in Eurostar. RMT said that “this compounds the issue of foreign ownership of Britain's railways as the French state (who own most of the rest of Eurostar) have first refusal on our slice of the highly profitable Eurostar cake. The French and Belgians think we are insane knocking off such a valuable and strategic infrastructure asset.”

If SNCF exercises its right to buy out Britain’s stake in Eurostar and win the East Coast franchise, it will control key passenger services from Marseilles all the way to Inverness!

TUC General Secretary Frances O’Grady said “Eurostar has thrived under public ownership, returning millions in profits each year to the Treasury. However, now it too has become a victim of the government’s ‘private works best’ market dogma.

“Privatisation has been a disaster for the UK’s railways. Train firms rely upon public subsidies to turn a profit, virtually all of which ends up in shareholders’ pockets, rather than being re-invested back into the network.

“By choosing to ignore this evidence ministers are once again putting the interests of private companies and shareholders before those of passengers and taxpayers.”

The same is true of East Coast, currently the most profitable of the passenger franchises. 

More peak fares

The British government has also found a new way to rip-off rail users already paying high fares. NS and Serco jointly own Northern Trains which operates local services across the north of England, around Liverpool, Manchester, Sheffield, Leeds, Hull, York and Newcastle. The company was recently instructed to introduce peak fares for the evening peak period as well as the morning peak, with some users facing increases for journeys of more than double the previous fare as a result.

The new part of this move is the fact that until now, a cheap off-peak fare is valid for train journeys so long as the whole journey is scheduled to begin before or after the peak period, including any changes in trains.

Under the new Northern arrangements you can still set off with a valid ticket up to one minute before the evening peak period. But if you then change trains, your off-peak ticket is no longer valid and you will be hit with what could be a big surcharge up to the peak fare. It gives a whole new meaning to Peaky Blinders!

Foreign private companies are not missing out on milking of Britain’s railways for profit either. Those profits are only possible because of huge public subsidies injected by Britain’s taxpayers. The subsidies are now many times more in real terms than were received by publicly-owned British Rail.

“The railways here in Britain are being used as a cash-cow to hold down fares and improve services across the rest of Europe.”

That most profitable part of Britain’s privatised railways, the three rolling stock leasing companies, are very much favoured by foreign investors. Is it any wonder? These companies represent the most scandalous aspect of rail privatisation; they have made embarrassingly huge profits out of what were state-owned assets in a story akin to Russian oligarchs!

In 2009, the rail regulator called in the Competition Commission to look into whether these companies were overcharging operators to lease trains. The commission concluded that the three companies could have cost the taxpayer as much as £100 million a year. It blamed the structure of the rail franchising system and the John Major government for selling the companies far too cheaply at the time of privatisation.

Even London mayor Boris Johnson realised the complete rip-off these companies represent, choosing to order trains for London’s new Crossrail services through the public purse by ordering them directly from the manufacturers.

These companies, originally British-owned, keep changing hands amongst international speculators. Porterbrook has just been sold by a consortium owned by Deutsche Bank and funds OPTrust and Antin Infrastructure. The new owners are another consortium, principally Australian company Hastings, and Canada’s Alberta Investment Management Corporation, two investment companies whose clients can clearly see how easy it is to make huge profits at British taxpayers’ expense.

Notably, the other main player in the new owning consortium is EDF Invest – owned largely by (you guessed it) the French state!

Rail unions continue to be concerned about the fact that the profit motive coupled with cut backs in state-owned rail infrastructure company Network Rail will compromise rail safety.

Last October, a freight train was derailed in Camden, London, with container wagons perched precariously on top of a viaduct in a very busy part of the capital. The railway is shared with the London Overground train service. Only luck averted a major disaster and significant loss of life.

The Rail Accident Investigation Branch (RAIB) has just reported its findings, blaming a series of failures and operational issues which had been raised repeatedly by rail unions, including poor and deteriorating track condition, and a failure to meet key maintenance schedules and thresholds for taking corrective action. Similar issues had been raised by the RAIB in a recent report into the derailment of a freight train near Gloucester, also occurring last October. Unions blamed Network Rail’s cuts to maintenance and staffing.

The current state of Britain’s railways is becoming a growing political issue. Both TSSA and ASLEF have been pinning their hopes on the Labour Party pledging to return the railways to public ownership as part of their manifesto for the 2015 General Election.

But Miliband and Balls have been desperately trying to avoid giving any such commitments. The result has been an unworkable fudge, with Labour now saying that it will allow the Britain’s state-owned rail operator, East Coast Mainline, to compete for franchises.

Such an approach will do nothing to change a completely discredited system. The demand from all rail workers and their unions must be for Britain’s railways to be owned and run for the benefit of Britain’s people, not for the benefit of foreign governments or private shareholders.

• See companion article, Rail: SNP sells out to Dutch