Conservative Transport Minister Chris Grayling will reportedly announce the partial sell-off of state-owned Network Rail on Tuesday 6 December. The public body is responsible for track maintenance across the UK. And the Conservative government has decided such maintenance will be better off in the hands of private companies, like Richard Branson’s Virgin Trains.
So train operators will now control part of the track infrastructure, perhaps for the lines on which they operate. And Virgin Trains, which run across the length and breadth of the country, will likely be one of the big winners.
‘Vertical integration’
Grayling will announce the plans during a speech to the think tank Policy Exchange, according to The Telegraph. The Transport Minister has long been an advocate of having rail infrastructure under the private control of train companies. As Shadow Transport Secretary in 2006, he said:
We think, with hindsight, that the complete separation of track and train into separate businesses at the time of privatisation was not right for our railways.
At the time, Grayling claimed that the separation had raised the cost of running the railways and fares. He also blamed slow moving improvements on there being “too many people and organisations” party to decision-making.
So he will announce that the government is considering a “vertical integration” of infrastructure maintenance and train operation; whereby operators maintain the lines they use. And according to publicity material sent out by Policy Exchange ahead of the speech, this plan would “put the passenger at its heart, ensuring that journeys are safe, quick, and provide value for money”.
Ignoring history
A private company called Railtrack was Network Rail’s predecessor. The Conservative government’s 1993 Rail act led to its creation. Then-Prime Minister John Major introduced the act, which dissolved British Rail and privatised the industry.
But in 2001, the then-Labour government shut down Railtrack. Its closure was due to catastrophic safety failures, including the Hatfield crash, and skyrocketing costs. So although Network Rail itself has seen its own financial problems and fatal safety failures, the last time the maintenance service was in private hands its record was worse.
So why are we selling it?
As Grayling noted in 2006, Railtrack was a separate company, not run by train operators. The current plan will combine the two. And that’s something that Richard Branson will likely welcome if his past rhetoric is anything to go by.
In 2015, Branson told the BBC that changes should be made to Network Rail. He explained:
Network Rail is far too big a company, I think that companies that kind of size should be broken up into small units.
Branson literally owns an empire, so his dismay at Network Rail’s size is hypocritical. But he continued to say that “ideally” train companies should manage the tracks they use. So that ‘dismay’, and his solution for it, could result in a fat pay out for Branson. And for other train operators in the country.
In whose interest?
The government subsidises Network Rail to the tune of billions each year. And any profit made by the company is fed back into its work due to it being a public service.
Under the new plan, profit would go to shareholders. While subsidies for infrastructure maintenance, if they continue, would top up the massive pile of government handouts train companies already receive for their services. And crucially, it would place entities whose primary motive is maximising profit in a role that should prioritise safety.
We need only look to the past to know how this plan will turn out. Since companies like Virgin have owned our trains, ticket prices have rocketed – a further increase of 2.3% is expected in January 2017. Also, both Virgin and Southern Rail are embroiled in mass compensation claims.
Furthermore, since the Conservative government handed parts of our NHS to this same company (Virgin), the health service has fallen into a £841m deficit, as of 2015.
It’s very unlikely that this latest privatisation will work out well for the public, or their services. But it will delight the likes of Branson, and the Conservative government itself. For the Tories, there’s no business like the slow business of auctioning off everything we own.
And this is the latest nail in our public service coffin.
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Featured image via UNclimatechange/Flickr
