Privatising Network Rail could be bad for passenger safety and lead to higher fares, according to a new report published today (Thursday).
The report – Staying On The Right Track by Dr John Stittle (Senior Lecturer in Accounting at the University of Essex) – also warns of a “disastrous” return to the days of Railtrack if Network Rail becomes a for-profit company.
The report was commissioned by the TUC and rail unions’ Action for Rail Campaign in response to the government consultation being undertaken by Nicola Shaw into the future shape and financing of Network Rail.
Submitted on the day of the close of the consultation, Dr Stittle’s report outlines the following key arguments against re-privatising Network Rail.
· Passenger safety – The report warns that privatising Network Rail could lead to a decline in safety standards.
The report notes that under Network’s Rail’s privatised predecessor Railtrack there were far more workplace accidents, broken rails and trains ignoring emergency signals.
The report says that if Network Rail is devolved or sold off to companies this could threaten the substantial improvements in passenger safety made since Railtrack’s collapse.
· Higher fares – The report warns that if Network Rail is privatised, money that should be spent on improving the UK’s rail infrastructure will end up going to shareholders.
Railtrack, even when posting big losses, still paid out huge dividends.
Were privatisation to happen, the cost of future improvements would have to be passed on to taxpayers or funded by higher fares.
· Projects running over budget – The report highlights Railtrack’s poor record of delivering important infrastructure projects on budget. For example, the cost of up-grading the West Coast Main Line cost skyrocketed from £2.5 billion to £14.5 billion under Railtrack’s management.
With major upgrades planned, such as the electrification of the TransPennine and Midland Mainline routes, handing control back to the private sector would pose a huge risk to the taxpayer.
· Debt – If Network Rail’s debt is no longer underwritten by the state, potential equity investors will almost certainly hesitate to invest. And without government guarantees, the annual interest cost of Network Rail’s debt could become unsustainable.
· Fragmentation - The fundamental challenge faced by UK rail is that it is too fragmented with competing interests pursuing short term commercial gains. Privatising Network Rail would only make this problem worse.
The Shaw review should therefore give more priority to the benefits of a vertically integrated railway in public ownership supported by more longer- term and sustainable funding,
Senior Lecturer in Accounting at the University of Essex Dr John Stittle said:
“It is essential that the Shaw Commission does not support any form of privatisation for Network Rail. Railway privatisation has been a clear and costly failure for both passengers and tax payers.
“The country cannot afford to have Network Rail privatised either wholly or partially. The industry must not be returned to the disastrous era of Railtrack where shareholder returns were placed above safety and investment.”
TUC General Secretary Frances O’Grady said:
“This report provides a very compelling case for keeping Network Rail as a public body.
“Taxpayers and the travelling public deserve a modern, sustainable approach to upgrading our railways. Not a repeat of past failures.
“Resurrecting the ghost of Railtrack could lead to a worryingly decline in safety standards and higher fares.
“More fragmentation and commercialisation would be the worst of both worlds.”
ASLEF General Secretary Mick Whelan said: "We remain hopeful that the mistakes of the past will not be repeated as a result of the Shaw report.
“We cannot return to the spectre of compromised safety and investment that could be driven by regional capacity and the obvious impact that would have on this country's economic future."
RMT General Secretary Mick Cash said:
“We know that there are siren voices on the right who want to carve up and privatise Network Rail and drag us back to the lethal days of Railtrack and the disasters at Hatfield and Potters Bar. Those wreckers must be fought all the way.
“If the profits bled out of our railways by the greedy private train companies were reclaimed and re-invested through a publicly-owned operation, with Network Rail at its heart, we would have a chance of building a reliable and affordable rail service fit for the modern age.”
Unite national officer for passenger transport Bobby Morton said:
“The Hatfield rail crash in 2000 exposed the major stewardship shortcomings of the privatised national railway infrastructure company Railtrack. It would be madness to revert to this discredited business model where profit trumped all other considerations.
“If the lessons of history teach us anything, it is that a publicly-owned railway system provides the best overall approach in terms of investment, cheaper fares and better health and safety – you only have to look to Europe to see the strong evidence for this.”
NOTES TO EDITORS:
- The Nicola Shaw consultation on the future shape and finance of Network Rail closes on Christmas Eve.
- All TUC press releases can be found at www.tuc.org.uk
- Follow the TUC on Twitter: @The_TUC and follow the TUC press team @tucnews