Friday, August 03, 2007

One-way ticket to chaos

This article of mine appears in today's Morning Star.

The highest ticket prices in Europe. The most complicated fare structure. Overcrowded carriages where commuters who have paid a fortune for a season ticket often have to stand in toilets. You wouldn't think any one in their right minds would want to follow the British example and sell-off their state-owned railways would you?

Yet incredibly, that's exactly what's happening.

Although the notorious "Third Railway Package" which proposed the "liberalisation" of rail passenger transport was defeated in the European Parliament in January, other countries in Europe are already embarking along the same disastrous route towards privatisation that Britain followed in the 1990s.

The German government is preparing plans to sell up to 50% of the country's state- owned railway Deutsche Bahn. "From the company's viewpoint, private investors will be able to buy shares in DB in 2008," predicted DB's Chairman and CEO Hartmut Mehdorn in a press conference. How sad.

Any one who spends time travelling on Germany's state-run railway will know that it's a different class to Britain's privatised, fragmented network. Trains run to the second, the fare structure is simple and easy to understand, and you always get a seat. The way Deutsche Bahn responded to the extra challenge of last year's World Cup was exemplary: extra trains and carriages were laid on and supporters all praised the way that public transport was organised. So why on earth are the German government jeopardising a system that works so well? It's all part of an obsession with neo-liberal economics held by some members of the ruling CDU Party, and a dogmatic belief that 'private ownership' is always more efficient than 'public ownership' And of course pressing for the sell-off are the banks and finance houses, for whom privatisation is a gold mine.

Further east, the story is even worse. Last week, the Hungarian government announced that it had received 12 bids for the cargo division of MAV, the Hungarian State railway. The Hungarian government claims the move is about reducing government debt in order to qualify for Euro membership. Yet, if that's the case, why sell off a company which made a profit of 2.8 billion forints (about £7.5m) last year? The sell-off of MAV Cargo is only the latest in a series of steps prior to privatisation of the whole network.

To make the railway more attractive to foreign predators, the Hungarian network has been savaged. Last November, a new Railway Code came into force under which the whole railway infrastructure will be separated from MÁV. In March service was suspended on 14 lines; in April a leaked report revealed that the government intends to close all small regional lines after 2008, leaving just a minimal inter-city network. Prices have risen sharply, in January fares rose by 16%, on 1st May by a further 17%. And thousands of railway workers have lost their jobs.

The destruction of one of the most comprehensive railway networks in the continent means that the many villages which inaccessible by road, will effectively be cut off from the rest of the country. Not that this seems to concern the pro-big business government in Budapest too unduly.

It's not hard to see the connection between global finance capital and the process of rail privatisation. Among the bidders for MAV Cargo are the Lehman Brothers, the US 'global financial services' firm and the UK-listed, Channel Islands-based venture capitalist group Ashmore Group. A merchant bank and venture capitalists running the cargo division of a railway? The very idea would have been unthinkable thirty years ago. But in the age of turbo capitalism, where politicians represent the interests of global capital and not their people, and every publicly owned asset has to be put up for sale, it is regarded as perfectly normal.

Make no mistake - the beneficiaries of railway privatisation are big business and certainly not passengers. Eleven years after privatisation, rail travel in the country which invented the railways is effectively a luxury, priced out of the reach of people on average or below average incomes. Ripping-off passengers is integral part of the privatisation model. South West Trains, Britain's biggest rail company, has told its guards they will be disciplined and possibly dismissed if they show discretion to passengers who are unable to buy tickets before boarding because of long queues at stations. The same company has been accused of secretly programming its ticket machines not to sell cheaper GroupSave fares: the scandal coming to light when a group of Falklands war veterans on their way to London were charged more than double the cheapest fare available.

The government's new rail strategy, announced recently, offers yet more misery for passengers, with ticket prices set to rise by as much as 30% above inflation in the seven years. The logical solution- bringing the railways back into public ownership -a move supported by the vast majority of the public, was not even considered.
British taxpayers pay an incredible four-times more in subsidy to the private rail profiteers than they did under British Rail, yet we hear nothing about this waste of public money from 'free market' pressure groups who normally recoil in horror when the words 'state subsidy' are mentioned.

For other countries to follow such a flawed model is lunacy. Instead of copying Britain, it's Britain who should be copying those countries who have kept their railways in public ownership- like Belgium, whose comprehensive, efficient, publicly owned network has the lowest fares, in real terms, in western Europe.
In Britain a next day peak-time 200 mile return journey ticket costs £202. In Belgium it costs just £23.83. The choice is clear, do we want a railway that puts the interests of passengers first, or one that puts the profits of global capitalists first?

Let's hope sanity rules before it's too late.


Nick said...

"Let's hope sanity rules before it's too late."

Not much chance of that, I'm afraid, with European politics going the way it is. It's capitalism that rules, sadly.

Anonymous said...

What is going on is unbelievable.
All that is good about Europe is being destroyed under pressure from the most destructive form of capitalism ever known to man.

Martin Meenagh said...

I couldn't agree more; and what if the oil runs out, or if we all move towards cities where owning a car is too expensive because of a premium on space and taxes? The one system that will come into its own will be starved of investment because of private shareholders, bereft of protection from nonsense planning inquiries because it will be a private body, and run by spiv consultants with nonsense degrees. Then, no doubt, someone will start tutting and say 'well, we should have kept our railways...'. God, I wish the european govenments would behave with railways like the monster states that neo-cons keep drivelling on about; or even that states would have some self-confidence. The terms of argument HAVE to change sometime--keep up the good work Neil!

B Denny said...

I'm afraid it it just not true to say that 'Europe' is following the UK model of rail privatisation.

The UK was just the first to implement EU directive 91/440/EEC which demands a split between operations and rail infrastructure and 'liberalisation'. Below is a link to a piece I wrote with a colleague outlining how EU rules are enforcing this dangerous practice across the EU.

Neil Clark said...

Thanks for writing in Brian.
It is true to say that Europe is following Britain on the privatisation front as there was there is nothing in EU Directive 91/440/EEC which demands that national railways be privatised. As you wrote yourself:

"Despite the introduction of 91/440, the path followed by national rail administrations of other European member states has differed radically from the UK government's wholesale adoption of the Commission's privatisation model. This was due in large measure to the disastrous experience of the directive's application in the UK. "

The Major govt used the directive as an excuse to sell-off the railways, which they would have done anyway. They were hardly known for their enthusiasm for following EU directives in other areas! EU Directive 91/440/EEC might be batty and I think we all agree on that- but it's not the reason why the Hungarian govt is selling MAV Cargo or why the German govt is preparing to sell up to 50% of Deutsche Bahn.