Join the Socialist Party Join us today!

Printable version Printable version

Facebook   Twitter

Link to this page: https://www.socialistparty.org.uk/issue/587/7516

From The Socialist newspaper, 7 July 2009

National Express goes off the rails

THE NEWS that National Express has walked away from its east coast rail franchise comes at a time when most other tocs (train operating companies) are experiencing a drop in revenue due to the recession. Transport secretary Lord Adonis has temporarily nationalised the line prior to a future resale.

Mark Pickersgill

The company will only be exposed to a debt of 72 million even though it negotiated a contract with the Department for Transport to pay back 1.4 billion for the franchise up until 2015. This is because National Express set up a separate company, a special purpose vehicle called 'National Express East Coast', which means that National Express itself will not have to carry any liabilities or face any financial penalties.

The company did offer 100 million rather than the original 72 million but this was turned down by the government on the grounds that it could be construed that a toc could be courting favour!

However it is public money that will be used to cover the shortfall, putting major rail upgrading works at risk - including electrification of the Midland and Great Western main lines.

Privatisation

Under rail privatisation, companies make a bid for a franchise anticipating that revenues will rise, allowing the company to pay back to the government a set amount of money called 'premium payments'. The tocs receive huge government subsidies - 800 million was paid out to the top eight companies last year - so the idea that these companies will pay back the subsidies by way of premium payments looks good for the government's accounts.

In the case of the east coast main line, National Express anticipated an annual increase of 10% in revenue allowing them to pay back 55 million for this year (1.4 billion for the whole eight year contract) but this year the increase in revenue was only 3%, meaning that the company would have to make up the shortfall itself or, as National Express decided to do, hand back the franchise to the government.

Other tocs are also experiencing huge drops in revenue, such as Stagecoach who run South West Trains and have a liability of 1.2 billion. They too may also walk away without being penalised.

Several other companies have the so-called 'cap and collar' arrangement in force and this is used to stop tocs from receiving windfall gains (the cap) while protecting the companies from the severity of recessions (the collar). The arrangement is written into most of the contracts that are awarded to the tocs and comes into force after five years of running a franchise (in the case of National Express the cap and collar clause would not come into effect until 2011).

The cap and collar clause means that the government steps in and pays up to 80% of any fall in projected revenue that the rail franchise incurs and this year the amount of money being paid out by the government to the tocs will be around 500 million.

The rail network costs the taxpayer three times more than it did under publicly-owned British Rail, and fares in Britain are the most expensive in Europe. Privatisation of the railways has allowed big business to extract huge profits from the system while using public money to underwrite any losses.

The government has been forced to step in to save Railtrack and Metronet in the recent past because private enterprise is unwilling and incapable of funding the huge amount of investment required to run a public transport system. The Socialist Party calls for the complete renationalisation of the whole transport system run under democratic workers' control.

Why not click here to join the Socialist Party, or click here to donate to the Socialist Party.


In The Socialist 7 July 2009:

Action now to defend public sector


Youth fight for jobs

Jobs not dole


Socialist Party editorial

Brown's dead duck government

Postal workers need a national fightback


Socialist Party news and analysis

National Express goes off the rails

First Bus - no to pay freeze

Demanding justice for Shrewsbury 24

News in brief


Socialist Party women

Why women don't have real equality


International socialist news and analysis

Police trigger ethnic clashes in Xinjiang

Honduras coup - a warning to workers in Latin America

Sri Lanka: Protest over DfID role


Socialist Party reviews

Stalin's Nemesis: The Exile and Murder of Leon Trotsky

Arundhati Roy - politics and literature


Education

Higher fees in higher education

Drama students enter the stage of struggle

Teachers' MOTs

First strike against Trust schools

Strike against BSF proposals


Socialist Party workplace news

RMT Annual General Meeting: "If provoked - Will strike"

Save jobs at Vestas wind turbine plant

Private companies caught in jobcentre scam

South West Wales Media: Fight for jobs, defend conditions

Oilc - fighting for decent working conditions in the North Sea


 

Home   |   The Socialist 7 July 2009   |   Join the Socialist Party

Subscribe   |   Donate  




Related links:

National Express:

triangleNationalise rail now!

triangleThe Socialist inbox

triangleWorkplace News in brief

triangleWorkplace news in brief

triangleNewcastle East Coast rail call centre - Save jobs!

Rail:

triangleRMT strikes against driver-only operation continue

triangleRMT rail members buoyed by coordinated action

triangleStrike against driver-only operation on five rail networks

triangleRail: fares up, bosses' pay up - delays and cancellations up

Transport:

triangleMerseyrail protest

triangleArriva bus drivers' action wins pay rise

triangleArriva bus strikers stand firm

Pay:

triangleGerman engineering strike puts shorter week on agenda - but could have won more

triangleAfter 80 strike days Mears workers achieve victory

Privatisation:

triangleNorthants council crisis - protesters demand an end to cuts and privatisation

Reports and campaigns

Reports and campaigns

23/2/18

UCU

Lecturers strike around country in defence of pensions

21/2/18

Strike

German engineering strike puts shorter week on agenda - but could have won more

21/2/18

Cardiff

Cardiff Refugee Rights gig success

21/2/18

Nottingham

Nottingham hospital black alert

21/2/18

East Midlands

Lively discussion at East Midlands Socialist Party conference

21/2/18

West Midlands

Tremendous determination on show at West Midlands conference

21/2/18

Wales

Successful Socialist Party Wales conference sets tone for the year ahead

21/2/18

Bradford

Bradford protests against kids' service cuts

21/2/18

May Day

May Day, May Day! Celebrate solidarity!

21/2/18

Kirklees

Labour councillors push through savage cuts in Kirklees budget

21/2/18

Salford

Save Salford nurseries!

21/2/18

Caerphilly

Victory: Pontllanfraith leisure centre saved

21/2/18

Council

Northants council crisis - protesters demand an end to cuts and privatisation

21/2/18

Leicester

Leicester Uni makes Tory fee tripler David Willetts chancellor - sack Willetts!

21/2/18

UCU

Bosses divided - university pension strikes can win!

triangleMore Reports and campaigns articles...


Join the Socialist Party
Subscribe to Socialist Party publications
Donate to the Socialist Party
Socialist Party Facebook page
Socialist Party on Twitter
Visit us on Youtube

LATEST POSTS

CONTACT US

Phone our national office on 020 8988 8777

Email: info@socialistparty.org.uk

Locate your nearest Socialist Party branch Text your name and postcode to 07761 818 206

Regional Socialist Party organisers:

Eastern: 0798 202 1969

East Mids: 0773 797 8057

London: 020 8988 8786

North East: 0191 421 6230

North West 07769 611 320

South East: 020 8988 8777

South West: 07759 796 478

Southern: 07833 681910

Wales: 07935 391 947

West Mids: 02476 555 620

Yorkshire: 0114 264 6551

ABOUT US

ARCHIVE

Alphabetical listing


February 2018

January 2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999