Privatisation 'failed to deliver'

Train stationRail privatisation has led to the UK having the most expensive fares in Europe, older trains, serious overcrowding and train operating companies entirely reliant on public subsidies, according to a new study.

The TUC said privatisation had failed to deliver for rail users and taxpayers, and had brought in little private-sector investment. Its report, The Great Train Robbery, showed that private train companies were heavily dependent on the public purse to enable them to run services and re-invested little of their profits back into the railways.
Firms receiving the largest state subsidies spent, on average, in excess of 90% of their profits on shareholder dividends, according to the study carried out by the Centre for Research on Social-Cultural Change (CRESC) at the University of Manchester.

Train companies made operating profits between 2007 and 2011 of £504 million, most of which was paid to shareholders, said the report. Meanwhile, the average age of trains has risen from 16 years in 1996 to 18 years old in 2013. Just £1.9 billion was spent on rolling stock between 2008 and 2012, compared to £3.2 billion between 1989 and 1993.
The report added that more than 90% of new investment in recent years has been financed by Network Rail and came mainly from taxpayer funding or government-underwritten borrowing.

Long distance, day return and season tickets are all around twice the price of similar tickets in France, Germany, Italy and Spain, which have publicly-run rail systems, while average train fares in the UK increased at three times the rate of average wages between 2008 and 2012, said the TUC.

The report dismissed claims that privatisation had helped increase the number of people travelling on the railways, maintaining that passenger growth has mostly been down to rising economic output and changes in employment patterns rather than because of privatisation.

TUC general secretary Frances O'Grady said: "This study explodes the myth that rail firms are bringing added value to our railways. In reality they rely upon taxpayers to turn a profit, virtually all of which ends up in shareholders' pockets, rather than being used to improve services."

Michael Roberts, chief executive of the Association of Train Operating Companies, said: "By introducing competition between train companies to run services, government has ensured operators have played a crucial role in reversing the fortunes of the railway by motivating them to attract more passengers.

"Significant investment plus an industry focused on encouraging rail travel are generating record levels of revenue to pay for more trains, faster services and better stations."
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