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Labour eyes state control of railways
From the Financial Times of Sun, 04 May 2014 11:37:09 GMT
Commuters And Passenger Trains After Announcement U.K Rail Fares May Increase...Rail passengers stand and wait for a train on a platform at Clapham Junction railway station in London, U.K., on Tuesday, Sept. 18, 2012. U.K. rail fares will jump as much as 6.2 percent in January, based on inflation figures released last month, with increments of more than 10 percent possible if train companies vary price changes, lobby group Passenger Focus said puknews©Bloomberg

Ed Miliband said he was considering a greater element of state control for the railways, as he was urged by 30 Labour parliamentary candidates to bring all of Britain’s franchises in-house.

Speaking on BBC’s The Andrew Marr Show on Sunday, the Labour leader said passengers were paying high fares while taxpayers were paying “big subsidies” for a franchise system that was not working well for either.

The opposition party has argued there should always be one state-run franchise as a “comparator” for the private operators – currently the East Coast line, which was nationalised in 2009. But in a letter to The Observer newspaper, the 30 candidates urged the Labour leader to go further and promise to bring all franchises under state control, albeit only as the existing franchises come to an end.

Mr Miliband insisted that Labour would not take the system back to the old days of British Rail, with a single monopoly provider. “We have to be pragmatic,” he said. “There are benefits you can have from competition.” However, he said his party was still “looking at all the options” on the railways and its firm decision would not emerge until the publication of the general election manifesto.

The coalition’s decision to privatise East Coast was “dogmatic”, he said.

In their letter, the candidates said: “Train companies walk away with hundreds of millions of pounds every year, despite running monopoly services and benefiting from £4bn of public investment in the rail network every year.”

The signatories included Polly Billington, a former adviser to Ed Miliband, and Andrew Pakes, a former aide to Mary Creagh, the shadow transport secretary.

An Observer/Opinium poll suggested that 55 per cent of people backed some form of renationalisation while only 18 per cent opposed it.

The letter comes as the government is facing questions over whether it is getting value for money from the franchise system.

The transport department extended nine train franchises without opening them to full competition as it grapples with the fallout from the West Coast rail fiasco of two years ago.

That crisis was sparked when FirstGroup won a 13-year deal to manage the rail network linking London to Scotland, only for previous incumbent Virgin Trains to challenge the decision in court and eventually force a government U-turn. The process cost taxpayers about £55m and led to a major overhaul of the franchising process.

Analysts have warned that the lack of competition means that bidders are more likely to extract lenient terms from officials.

Ms Creagh told the FT that it was wrong that passengers should have to pay the price for the government’s “incompetence” over the West Coast line.

“The government’s West Coast franchising fiasco has led to franchise extensions which will add to rail companies’ profits and cost taxpayers and passengers more,” she said.

In particular, Ms Creagh has criticised the terms under which FirstGroup agreed an extension of its deal to run the First Great Western line from Paddington to Penzance. Its deal has been stretched until September 2015 and negotiations are under way to lengthen this further until 2020.

“In 2012/13 First Great Western returned £169m a year to taxpayers under the franchise negotiated by Labour,” she said. “Yet this will plummet to just £17m a year under the franchise extension negotiated by this government.”

A DfT spokesman said the new programme would deliver significant benefits for passengers and taxpayers. “In order to manage the market efficiently, we have followed independent advice which recommended limiting the franchising process to three full competitions a year,” he said.

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