YESTERDAY the Tory government announced its plans to save the profits of the private rail companies by bankrolling them for another 18 months.
In March, when lockdown started, every single rail company faced being wiped out as passenger numbers plummeted by 90%.
At this point the Tories stepped in to guarantee their survival and their profits by introducing Emergency Measures Agreements (EMAs) which guaranteed the train operators’ profits with taxpayers’ money.
Over £3.5 billion of public money was handed out to the privateers. These EMAs ended on Sunday, but for months the train operators have been in secret talks with the government about how to continue this bail-out. The result of these talks is a new Emergency Recovery Management Agreement (ERMA).
Under this new arrangement the Department for Transport (DfT) will carry on covering the rail companies’ losses, and pay them a fixed fee of 1.5% of the operating costs they incurred before the pandemic.
Announcing the new ‘emergency measures’ transport secretary Grant Shapps said: ‘The model of privatisation adopted 25 years ago has seen significant rises in passenger numbers, but this pandemic has proven that it is no longer working.’
In fact, industry experts are predicting that the cost of bailing out the privateers and guaranteeing their profits will go way beyond the £3.5 billion already handed to them.
No wonder the privateers greeted these measures with enthusiasm with Paul Plummer, head of the Rail Delivery Group which represents train firms, saying: ‘These transitional contracts should be the stepping stone to a better railway.’
A better railway for the companies is one where their profits are guaranteed to come out of the working class – without them taking any risk at all.
This is the ‘concessionary model’ for the railways, which is already in operation on Merseyrail and the London Overground.
Private companies run services for a fixed fee and any loss or profit falls to the government in charge – meaning that the private companies face no risk of losing money.
One of the features of the present arrangement is that train companies that were losing money before the pandemic struck, and which were on the verge of just walking away, have now been kept going.
‘Handing in the keys’ and abandoning their franchises risked financial penalties for walking away before the end of the contract.
But with these emergency measures they can cheerfully carry on running down the service, assured of profits and shareholder dividends and with no risk of any penalties – all paid for by the taxpayer.
The railworkers’ union, RMT, responded to this announcement by demanding that the government cut out the middleman and bring all UK rail franchises back into public ownership once and for all.
RMT general secretary Mick Cash said: ‘This announcement should now force the government’s hand and lead them to face up to what has been staring them in the face for the best part of three decades, that public ownership is the only model that works and can steer us through a crisis such as Covid-19. The Government must now ditch its obsession with the free-market and call to a halt any attempts to reanimate the corpse of rail privatisation.’
Cash concluded: ‘Covid-19 has proved that the private rail companies are a waste of time and a waste of money and have no place in a railway that’s fit for the future. It’s time to cut out the middleman and the priority now has to be protecting services and the staff who run them and not private profits.’
The reality is that nothing is going to ‘force’ the Tories to abandon privatisation of the railways or any other public service sold off to the privateers.
Their new ‘model’ for the railways is an extension of the old privatisation model that actually cuts out any financial risk to the privateers.
There is only one way to restore public ownership to the railways, NHS and all the other services, and that is to kick out this Tory government and go forward to a workers’ government that will renationalise without compensation all public services, and place them under the management of the working class as part of building a planned socialist economy.