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  • Writer's pictureNOR4NOR

Has European State Operation Hit The Buffers?

The European state owned rail companies that have come to dominate UK's privatised networks are to see major privatisations of their own European networks. This follows approval in the European Parliament of a policy initiative by the European Council.

The policy, known as 'the 4th Railway package', will open up railways to private operators and competitive tendering, as in the U.K. since 1993. Critics of the extension of privatisation in Europe were not heeded, as they warned of the consequences based on the UK experience.

Dr. Ian Taylor, in his presentation to the European Parliament (28/5/15) compared the performance of the privatised UK rail system to that of state run rail networks since 2000, and showed that the latter out-performed the former. Both systems saw an increase in passengers, but the increase was bigger in the state run systems. UK privatised rail fares were 109% higher than EU systems, and had increased by 23% since privatisation. UK rail operated at 40% higher cost than continental rivals due to the fragmentation of the system and greater inefficiencies in the supply chain. Subsidies from government were higher and had risen 100% since UK privatisation. Despite profits to shareholders of £700m per annum, the UK had comparatively little fresh investment and ever ageing rolling stock. For passengers, the complexity of fares and the fragmented timetables, and delays, made journeys more difficult. For rail workers, the UK system led to more industrial disputes over safety and pay than in Europe. No wonder that, 24 years on from privatisation, 60% of the UK public want rail renationalised.

UK rail operated at 40% higher cost than continental rivals due to the fragmentation of the system and greater inefficiencies in the supply chain.

But privatisation is to be extended throughout Europe! Why?

If the UK experience is repeated in the EU it will cause a deterioration in the efficiency of rail networks and further damage to EU political institutions. Why pursue a policy which is so obviously doomed to fail? Could it be that there is still life in the old right-wing dogma that private is good and the public is bad? There are those who say that UK privatisation never went far enough, 'Competition and private ownership were hamstrung by excessive government interference and over-mighty trades unions', they say.

On the other hand, it may be that the prospects for investing the huge private surpluses held by corporations are so poor in these times of economic crisis, that only by opening up public sector services can profitable opportunities be created. No doubt the managers of state railways will benefit from the privatisations of their businesses.

In the case of the UK, selling off public assets is driven by the necessity of securing inflows of foreign investment to balance the trade deficit of uncompetitive UK manufacturing.

The renationalisation of railways may be what the British public desires, but there are powerful interests behind the juggernaut of further privatisation.

Original Article by Peter Wilks, first Published in the NOR4NOR 2017 Newspaper.

Photo: Joshua Brown / Flickr Creative Commons License

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