RICHARD Branson of Virgin has yet again proved himself to be the most media savvy capitalist of his generation. Who else could have motivated 170,000 people to sign the e-petition urging the government to reconsider its decision to award the West Coast Main Line franchise to First Group?
Rail privatisation has failed. The Conservatives promised the privatised railways would require zero subsidy, in fact the cost has been paid in lives lost as well as tens of billions of pounds of taxpayers’ money.
Branson has made real progress in recapturing the contract from First Group. He's secured a Judicial Review of the decision, a special meeting of the House of Commons Transport Select Committee which will quiz him and Tim O’Toole Chief Executive of First Group, and is well on his way to a full debate in the Commons Chamber.
Branson has a straightforward task because it is easy to paint First Group as the villain of the piece; their local, national and international reputation is appalling.
First Group have a near monopoly of bus services in North Manchester and Salford and boy do my constituents suffer because of it: the Traffic Commissioner recently fined First a quarter of a million pounds for poor punctuality. Previously First had been forced to take buses off the road because they were unsafe; the wheels literally came off.
For the privilege of riding with First passengers are exploited with fares considerably higher than in South Manchester.
First’s reputation with rail passengers is no better. They expressed higher levels of dissatisfaction with the Great Western franchise between London, Bristol and South Wales run by First than virtually anywhere else in the rail system. First Group not only failed to perform with this franchise it negotiated a deal which gave it a significant subsidy in the early years turning to a premium towards the end of the franchise. First trousered the subsidy and then walked away when payments of the premiums became due.
Graham StringerFive or six years ago I went on a trade union sponsored visit to the United States of America and talked to bus drivers employed by First in Jacksonville and Minneapolis St Paul. These trade union activists told horrific stories of aggressive and dangerous union breaking activities.
It is difficult to fathom the mind of a government that awards the contract for the busiest rail route in Europe to a company with a negative international image, poor management performance and a record of having already abandoned a franchise.
First Group then are an easy target for Virgin, but what of Virgin themselves?
On taking over the franchise Virgin doubled standard and first return fares from London to Manchester, the standard return now stands at an eye watering £296. It is of course possible to get a cheaper advance ticket but this still leaves a huge financial burden on those people who have to travel at the last minute or make the mistake of boarding a train for which their bargain ticket is not valid.
Virgin are now infamous for their jack booted attitude to passengers who have genuinely made a mistake by boarding the wrong train. Tales are legion of old ladies being threatened with being dumped at the next station for having a now invalid ticket.
Like First Group Virgin is also a subsidy junkie. A cool £200million in profit has been taken by Virgin since rail privatisation, £15million last year and an astonishing £24m four years ago when tax payer subsidy reached a record £6.8bn.
What other industry would receive the colossal investment of £9bn from the public purse (used to upgrade the West Coast Main Line) in order that a private business could make a fat profit? With bare faced cheek, while creaming off these profits, Virgin cut routes to Shrewsbury and Blackpool.
There is merit to Branson’s accusation that the government would be ‘insane’ to award a franchise to First, which relies on an unachievable 10% growth in passengers every year for ten years. As there is credibility to First’s claim that Virgin have had their chance and have now came second in the bidding competition. It is like a United fan said when Liverpool played City recently, “I want them both to lose”.
Unlike a football match in this situation both the government and the public can lose because what is exposed by this commercial spat is the absurdity of the rail franchise system. This is really the insane part of the process where the winning bidder either is granted a huge public subsidy or passes their costs onto the passengers via higher fares.
Rail privatisation has failed.
The Conservatives promised the privatised railways would require zero subsidy, in fact the cost has been paid in lives lost as well as tens of billions of pounds of taxpayers’ money. The solution is blindingly obvious rather than letting the franchises the government should allow them to lapse and run them itself thus recreating a safe publicly owned rail system.
Public opinion may just favour Virgin over First Group but renationalisation commands much larger support in opinion polls. Labour should grab this opportunity with both hands and renationalise the railways at no cost.
