Rail firms must not take us for ride - MP for Peterborough Fiona Onasanya

Peterborough has a long, proud history as a railway city; this was established in 1850 when the Great Northern Railway line opened between London and York and Peterborough became a major transport hub.

Saturday, 26th May 2018, 1:00 pm
Updated Friday, 8th June 2018, 8:50 am
Fiona Onasanya column

It still is: what happens to the East Coast line is of particular importance. Hence, I was more than a little chagrined at the recent news that Virgin Group and Stagecoach’s franchise will be discontinued on June 24, with the taxpayer picking up the bill.

The operators are being exited from their contract early, thus avoiding having to pay the government £2 billion.

This is the third such termination in the past twelve years. After Virgin’s exit, East Coast services will be run by a re-established London and North Eastern Railway, which is supposed to be run as a public-private partnership.

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The mistake was ever letting the East Coast line fall back into private hands in the first place. A 2013 report by the rail regulator suggested that the railway was best run and least costly to the taxpayer when it was state owned. Indeed, the report also stated that it was less expensive for the taxpayer than any of the 15 private franchises.

So why was it allowed to slip away? I believe that ideology has much to answer for: many accept it as a given that government is wasteful and private industry works towards maximising efficiency. After all, private industry is driven by the profit motive, and thus it logically follows that they have a powerful incentive to push costs out of the system. There is a difficulty with this line of thinking: it isn’t necessarily true. If the time horizons of an organisation are focused on the long term, then it may invest in say, new equipment today in order to save money tomorrow. However, if a business thinks only in quarterly figures, it may undercut its future potential to report profits in the present. The latter mode is inappropriate when it comes to thinking about infrastructure: everything about our railways, roads, and airports should be focused on ensuring long term sustainability, both from an environmental and cost perspective. Operators such as Virgin have proven themselves incapable of doing so.

Nevertheless, the Financial Times has reported Transport Secretary Mr Grayling, is an “ardent free-marketeer”; he said in 2015, prior to the General Election, “I believe Stagecoach and Virgin will not only deliver for customers but also for the British taxpayer.”

In light of recent events, has he changed his mind? I fear not. I fear the fog of ideology will likely descend once more. But, we’ve tried this three times. Fares have risen three times faster than wages since 2010.

Our money should be used to make transport cheaper; it’s time to call a halt on the taxpayer being taken for a ride.