Taking rail back into public ownership 'could save £1.2bn'

28 Sep 11
Britain's railways could be renationalised at minimal cost, saving £1.2bn a year of public money, a trade union-backed study has said.
By Mark Smulian | 28 September 2011

Britain’s railways could be renationalised at minimal cost, saving £1.2bn a year of public money, a trade union-backed study has said.

The Transport for Quality of Life consultancy said the fragmented rail system created by privatisation – with separate track, operating and rolling stock companies – was dysfunctional and wasteful.

Unnecessary costs to taxpayers arose from excessive interest on Network Rail debt, payments to subcontractors and shareholders, the cost of administering contracts between different parts of the system and from debt write-offs, it said.

In a report Rebuilding rail, published today for the Unite, RMT, TSSA and Aslef trade unions, the consultancy concluded that rail could be renationalised at little cost by the government taking over operating franchises as they expire, or as operators fail financially.

Network Rail’s status as a publicly funded private company could be ended by taking its £24bn debt on to the public balance sheet, which the report argued would save £156m a year because of the government’s superior credit rating.

Train operators could be freed from the requirement to lease trains from the rolling stock leasing companies, which the report said enjoyed ‘a largely monopolistic market position [which] should be ended as soon as possible’.

These steps would allow a single ‘guiding mind’ in the government to oversee an integrated track and operating system similar to that which existed before privatisation.

‘Through a step-by-step approach, the railway’s assets could be reacquired for the public at minimal immediate cost, with substantial ongoing savings being realised over time,’ it said.

Unite assistant general secretary Diana Holland said: ‘The fragmented, privatised rail network has been an unmitigated failure for passengers, workers, communities and the wider economy too.

‘This report exposes the impact of spiralling costs and the major problems for rail procurement and manufacturing, while setting out a positive way forward.’

Bob Crow, general secretary of the RMT, said the solution to the railways’ problems was to ‘stop the greed, fragmentation and profiteering of privatisation and we can save more than a billion pounds that could be invested back into the system’.

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